G.R. No.

201043               June 16, 2014

REPUBLIC OF THE PHILIPPINES, represented by the Armed Forces of the Philippines Finance
Center (AFPFC), Petitioner,
vs.
DAISY R. YAHON, Respondent.

DECISION

VILLARAMA, JR., J.:

Before the Court is a petition for review on certiorari under Rule 45 which seeks to nullify and set
aside the Decision1 dated November 29, 2011 and Resolution2 dated March 9, 2012 of the Court of
Appeals (CA) Mindanao Station in CA-G.R. SP No. 02953-MIN. The CA affirmed the orders and
decision of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 22 granting temporary
and permanent protection orders, and denying the motion to lift the said temporary protection order
(TPO).

Daisy R. Yahon (respondent) filed a petition for the issuance of protection order under the provisions
of Republic Act (R.A.) No. 9262,3 otherwise known as the "Anti-Violence Against Women and Their
Children Act of 2004," against her husband, S/Sgt. Charles A. Yahon (S/Sgt. Yahon), an enlisted
personnel of the Philippine Army who retired in January 2006. Respondent and S/Sgt. Yahon were
married on June 8, 2003. The couple did not have any child but respondent has a daughter with her
previous live-in partner.

On September 28, 2006, the RTC issued a TPO, as follows:

Finding the herein petition for the Issuance of Protection Order to be sufficient in form and substance
and to prevent great and irreparable injury to the petitioner, a TEMPORARY PROTECTION ORDER
is forthwith issued to respondent, S/SGT. CHARLES A. YAHON directing him to do the following acts:

1. Respondent is enjoined from threatening to commit or committing further acts of physical

abuse and violence against the petitioner;

2. To stay away at a distance of at least 500 meters from petitioner, her residence or her place
of work;

3. To refrain from harassing, annoying, intimidating, contacting or communicating with

petitioner; 4. Respondent is prohibited from using or possessing any firearm or deadly weapon
on occasions not related to his job;

5. To provide reasonable financial spousal support to the petitioner.

The Local Police Officers and the Barangay Officials through the Chairman in the area where the
petitioner and respondent live at Poblacion, Claveria, Misamis Oriental and Bobuntogan, Jasaan,
Misamis Oriental are directed to respond to any request for assistance from the petitioner for the
implementation of this order. They are also directed to accompany the petitioner to their conjugal
abode at Purok 2, Bobuntogan, Jasaan, Misamis Oriental to get her personal belongings in order to
insure the safety of the petitioner.
The Deputy Sheriff of this Court is ordered to immediately serve the Temporary Protection Order
(TPO) upon the respondent personally and to seek and obtain the assistance of law enforcement
agents, if needed, for purposes of effecting the smooth implementation of this order.

In the meantime, let copy of this order and petition be served upon the respondent for him to file an
OPPOSITION within a period of five (5) days from receipt hereof and let a Preliminary Conference
and hearing on the merits be set on October 17, 2006 at 2:00 o’clock in the afternoon.

To insure that petitioner can receive a fair share of respondent’s retirement and other benefits, the
following agencies thru their heads are directed to WITHHOLD any retirement, pension and other
benefits of respondent, S/SGT. CHARLES A. YAHON, a member of the Armed Forces of the
Philippines assigned at 4ID, Camp Evangelista, Patag, Cagayan de Oro City until further orders from
the court:

1. Commanding General/Officer of the Finance Center of the Armed Forces of the Philippines,
Camp Emilio Aguinaldo, Quezon City;

2. The Management of RSBS, Camp Emilio Aguinaldo, Quezon City;

3. The Regional Manager of PAG-IBIG, Mortola St., Cagayan de Oro City.

VIOLATION OF THIS ORDER IS PUNISHABLE BY LAW.

IF THE RESPONDENT APPEARS WITHOUT COUNSEL ON THE DATE OF THE

PRELIMINARYCONFERENCE AND HEARING ON THE MERITS OF THE ISSUANCE OF A
PERMANENT PROTECTION ORDER, THE COURT SHALL NOT RESCHEDULE OR POSTPONE
THE PRELIMINARY CONFERENCE AND HEARING BUT SHALL APPOINT A LAWYER FOR THE
RESPONDENT AND IMMEDIATELY PROCEED WITH THE SAID HEARING.

IF THE RESPONDENT FAILS TO APPEAR ON THE DATE OF THE PRELIMINARY CONFERENCE

AND HEARING ON THE MERITS DESPITE PROPER NOTICE, THE COURT SHALL ALLOW EX-
PARTE PRESENTATION OF EVIDENCE BY THE PETITIONER AND RENDER JUDGMENT ON
THE BASIS OF THE PLEADINGS AND EVIDENCE ON RECORD. NO DELEGATION OF THE
RECEPTION OF EVIDENCE SHALL BE ALLOWED.

SO ORDERED.4 (Emphasis supplied.)

S/Sgt. Yahon, having been personally served with copy of the TPO, appeared during the scheduled
pre-trial but informed the court that he did not yet have a counsel and requested for time to hire his
own counsel. However, he did not hire a counsel nor file an opposition or answer to the petition.
Because of his failure to appear in the subsequent hearings of the case, the RTC allowed the ex-
parte presentation of evidence to determine the necessity of issuance of a Permanent Protection
Order (PPO).

Meanwhile, as prayed for by respondent who manifested that S/Sgt. Yahon deliberately refused to
give her spousal support as directed in the TPO (she claimed that she had no source of livelihood
since he had told her to resign from her job and concentrate on keeping their house), the RTC issued
another order directing S/Sgt. Yahon to give respondent spousal support in the amount of ₱4,000.00
per month and fifty percent (50%) of his retirement benefits which shall be automatically deducted
and given directly to respondent.5
In her testimony, respondent also said that S/Sgt. Yahon never complied with the TPO as he
continued making threats and inflicting physical abuse on her person, and failed to give her spousal
support as ordered by the court.

On July 23, 2007, the RTC rendered its Decision,6 as follows:

After careful review and scrutiny of the evidence presented in this case, this court finds that there is a
need to permanently protect the applicant, Daisy R. Yahon from further acts of violence that might be
committed by respondent against her. Evidences showed that respondent who was a member of the
Armed Forces of the Philippines assigned at the Headquarters 4ID Camp Evangelista, Cagayan de
Oro City had been repeatedly inflicting physical, verbal, emotional and economic abuse and violence
upon the petitioner. Respondent in several instances had slapped, mauled and punched petitioner
causing her physical harm. Exhibits G and D are medical certificates showing physical injuries
suffered by petitioner inflicted by the respondent at instances of their marital altercations. Respondent
at the height of his anger often poked a gun on petitioner and threatened to massacre her and her
child causing them to flee for their lives and sought refuge from other people. He had demanded sex
from petitioner at an unreasonable time when she was sick and chilling and when refused poked a
gun at her. Several police blotters were offered as evidence by petitioner documenting the incidents
when she was subjected to respondent’s ill temper and ill treatment. Verbally, petitioner was not
spared from respondent’s abuses by shouting at her that he was wishing she would die and he would
celebrate if it happens and by calling and sending her threatening text messages. These incidents
had caused petitioner great psychological trauma causing her [to] fear for her life and these forced
her to seek refuge from the court for protection. Economically, petitioner was also deprived by
respondent of her spousal support despite order of the court directing him to give a monthly support
of Php4,000.00. In view of the foregoing, this court finds a need to protect the life of the petitioner not
only physically but also emotionally and psychologically.

Based on the evidence presented, both oral and documentary, and there being no controverting
evidence presented by respondent, this Court finds that the applicant has established her case by
preponderance of evidence.

WHEREFORE, premises considered, judgment is hereby rendered GRANTING the petition, thus,
pursuant to Sec. 30 of A.M. No. 04-10-1-SC, let a PERMANENT PROTECTION ORDER be issued
immediately and respondent, S/Sgt. CHARLES A.YAHON is ordered to give to petitioner, DAISY R.
YAHON the amount of FOUR THOUSAND PESOS (Php4,000.00) per month by way of spousal
support.

Pursuant to the order of the court dated February 6, 2007, respondent, S/Sgt. Charles A. Yahon is
directed to give it to petitioner 50% of whatever retirement benefits and other claims that may be due
or released to him from the government and the said share of petitioner shall be automatically
deducted from respondent’s benefits and claims and be given directly to the petitioner, Daisy R.
Yahon.

Let copy of this decision be sent to the Commanding General/Officer of Finance Center of the Armed
Forces of the Philippines, Camp Emilio Aguinaldo, Quezon City; the Management of RSBS, Camp
Emilio Aguinaldo, Quezon City and the Regional Manager of PAG-IBIG, Mortola St., Cagayan de Oro
City for their guidance and strict compliance.

SO ORDERED.7 (Emphasis supplied.)

Herein petitioner Armed Forces of the Philippines Finance Center (AFPFC), assisted by the Office of
the Judge Advocate General (OTJAG), AFP, filed before the RTC a Manifestation and Motion (To Lift
Temporary Protection Order Against the AFP)8 dated November 10, 2008. Stating that it was making
a limited and special appearance, petitioner manifested that on August 29, 2008, it furnished the AFP
Pension and Gratuity Management Center (PGMC) copy of the TPO for appropriate action. The
PGMC, on September 2, 2008, requested the Chief, AFPFC the temporary withholding of the thirty-
six (36) Months Lump Sum (MLS) due to S/Sgt. Yahon. Thereafter, on October 29, 2008, PGMC
forwarded a letter to the Chief of Staff, AFP for the OTJAG for appropriate action on the TPO, and
requesting for legal opinion as to the propriety of releasing the 36 MLS of S/Sgt. Yahon. Petitioner
informed the RTC that S/Sgt. Yahon’s check representing his 36 MLS had been processed and is
ready for payment by the AFPFC, but to date said check has not been claimed by respondent.

Petitioner further asserted that while it has initially discharged its obligation under the TPO, the RTC
had not acquired jurisdiction over the military institution due to lack of summons, and hence the
AFPFC cannot be bound by the said court order. Additionally, petitioner contended that the AFPFC is
not a party-in-interest and is a complete stranger to the proceedings before the RTC on the issuance
of TPO/PPO. Not being impleaded in the case, petitioner lamented that it was not afforded due
process and it was thus improper to issue execution against the AFPFC. Consequently, petitioner
emphasized its position that the AFPFC cannot be directed to comply with the TPO without violating
its right to procedural due process.

In its Order9 dated December 17, 2008, the RTC denied the aforesaid motion for having been filed out
of time. It noted that the September 28, 2006 TPO and July 23, 2007 Decision granting Permanent
Protection Order (PPO) to respondent had long become final and executory.

Petitioner’s motion for reconsideration was likewise denied under the RTC’s Order10 dated March 6,
2009.

On May 27, 2009, petitioner filed a petition for certiorari before the CA praying for the nullification of
the aforesaid orders and decision insofar as it directs the AFPFC to automatically deduct from S/Sgt.
Yahon’s retirement and pension benefits and directly give the same to respondent as spousal
support, allegedly issued with grave abuse of discretion amounting to lack of jurisdiction. Respondent
filed her Comment with Prayer for Issuance of Preliminary Injunction, manifesting that there is no
information as to whether S/Sgt. Yahon already received his retirement benefit and that the latter has
repeatedly violated the TPO, particularly on the provision of spousal support.

After due hearing, the CA‘s Twenty-Second Division issued a Resolution11 granting respondent’s
application, viz:

Upon perusal of the respective pleadings filed by the parties, the Court finds meritorious private
respondent’s application for the issuance of an injunctive relief. While the 36-month lump sum
retirement benefits of S/Sgt. Charles A. Yahon has already been given to him, yet as admitted by
petitioner itself, the monthly pension after the mentioned retirement benefits has not yet been
released to him. It appears that the release of such pension could render ineffectual the eventual
ruling of the Court in this Petition.

IN VIEW OF THE FOREGOING, let a WRIT OF PRELIMINARY INJUNCTION issue enjoining the
Armed Forces of the Philippines Finance Center, its employees, agents, representatives, and any all
persons acting on its behalf, from releasing the remaining pension that may be due to S/Sgt. Charles
A. Yahon.

SO ORDERED.12
By Decision dated November 29, 2011, the CA denied the petition for certiorari and affirmed the
assailed orders and decision of the RTC. The CA likewise denied petitioner’s motion for
reconsideration.

In this petition, the question of law presented is whether petitioner military institution may be ordered
to automatically deduct a percentage from the retirement benefits of its enlisted personnel, and to
give the same directly to the latter’s lawful wife as spousal support in compliance with a protection
order issued by the RTC pursuant to R.A. No. 9262.

A protection order is an order issued by the court to prevent further acts of violence against women
and their children, their family or household members, and to grant other necessary relief. Its purpose
is to safeguard the offended parties from further harm, minimize any disruption in their daily life and
facilitate the opportunity and ability to regain control of their life.13 The protection orders issued by the
court may be a Temporary Protection Order (TPO) or a Permanent Protection Order (PPO), while a
protection order that may be issued by the barangay shall be known as a Barangay Protection Order
(BPO).14

Section 8 of R.A. No. 9262 enumerates the reliefs that may be included in the TPO, PPO or BPO, to
wit:

(a) Prohibition of the respondent from threatening to commit or committing, personally or

through another, any of the acts mentioned in Section 5 of this Act;

(b) Prohibition of the respondent from harassing, annoying, telephoning, contacting or

otherwise communicating with the petitioner, directly or indirectly;

(c) Removal and exclusion of the respondent from the residence of the petitioner, regardless of
ownership of the residence, either temporarily for the purpose of protecting the petitioner, or
permanently where no property rights are violated, and if respondent must remove personal
effects from the residence, the court shall direct a law enforcement agent to accompany the
respondent to the residence, remain there until respondent has gathered his things and escort
respondent from the residence;

(d) Directing the respondent to stay away from petitioner and any designated family or
household member at a distance specified by the court, and to stay away from the residence,
school, place of employment, or any specified place frequented by the petitioner and any
designated family or household member;

(e) Directing lawful possession and use by petitioner of an automobile and other essential
personal effects, regardless of ownership, and directing the appropriate law enforcement
officer to accompany the petitioner to the residence of the parties to ensure that the petitioner
is safely restored to the possession of the automobile and other essential personal effects, or
to supervise the petitioner’s or respondent’s removal of personal belongings;

(f) Granting a temporary or permanent custody of a child/children to the petitioner;

(g) Directing the respondent to provide support to the woman and/or her child if entitled to legal
support. Notwithstanding other laws to the contrary, the court shall order an appropriate
percentage of the income or salary of the respondent to be withheld regularly by the
respondent's employer for the same to be automatically remitted directly to the woman. Failure
to remit and/or withhold or any delay in the remittance of support to the woman and/or her child
 without justifiable cause shall render the respondent or his employer liable for indirect
contempt of court;

(h) Prohibition of the respondent from any use or possession of any firearm or deadly weapon
and order him to surrender the same to the court for appropriate disposition by the court,
including revocation of license and disqualification to apply for any license to use or possess a
firearm. If the offender is a law enforcement agent, the court shall order the offender to
surrender his firearm and shall direct the appropriate authority to investigate on the offender
and take appropriate action on matter;

(i) Restitution for actual damages caused by the violence inflicted, including, but not limited to,
property damage, medical expenses, child care expenses and loss of income;

(j) Directing the DSWD or any appropriate agency to provide petitioner temporary shelter and
other social services that the petitioner may need; and

(k) Provision of such other forms of relief as the court deems necessary to protect and provide
for the safety of the petitioner and any designated family or household member, provided
petitioner and any designated family or household member consents to such relief. (Emphasis
supplied.)

Petitioner argues that it cannot comply with the RTC’s directive for the automatic deduction of 50%
from S/Sgt. Yahon’s retirement benefits and pension to be given directly to respondent, as it
contravenes an explicit mandate under the law governing the retirement and separation of military
personnel.

The assailed provision is found in Presidential Decree (P.D.) No. 1638,15 which states: Section 31.
The benefits authorized under this Decree, except as provided herein, shall not be subject to
attachment, garnishment, levy, execution or any tax whatsoever; neither shall they be assigned,
ceded, or conveyed to any third person: Provided, That if a retired or separated officer or enlisted
man who is entitled to any benefit under this Decree has unsettled money and/or property
accountabilities incurred while in the active service, not more than fifty per centum of the pension
gratuity or other payment due such officer or enlisted man or his survivors under this Decree may be
withheld and be applied to settle such accountabilities. (Emphasis supplied.)

A similar provision is found in R.A. No. 8291, otherwise known as the "Government Service Insurance
System Act of 1997," which reads:

SEC. 39. Exemption from Tax, Legal Process and Lien -- x x x

xxxx

The funds and/or the properties referred to herein as well as the benefits, sums or monies
corresponding to the benefits under this Act shall be exempt from attachment, garnishment,
execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative
bodies including Commission on Audit (COA) disallowances and from all financial obligations of the
members, including his pecuniary accountability arising from or caused or occasioned by his exercise
or performance of his official functions or duties, or incurred relative to or in connection with his
position or work except when his monetary liability, contractual or otherwise, is in favor of the GSIS.

In Sarmiento v. Intermediate Appellate Court,16 we held that a court order directing the Philippine
National Bank to refrain from releasing to petitioner all his retirement benefits and to deliver one-half
of such monetary benefits to plaintiff as the latter’s conjugal share is illegal and improper, as it
violates Section 26 of CA 186 (old GSIS Law) which exempts retirement benefits from execution.

The foregoing exemptions have been incorporated in the 1997 Rules of Civil Procedure, as amended,
which governs execution of judgments and court orders. Section 13 of Rule 39 enumerates those
properties which are exempt from execution:

SEC. 13. Property exempt from execution.– Except as otherwise expressly provided by law, the
following property, and no other, shall be exempt from execution:

xxxx

(l) The right to receive legal support, or money or property obtained as such support, or any pension
or gratuity from the Government;(Emphasis supplied.)

It is basic in statutory construction that in case of irreconcilable conflict between two laws, the later
enactment must prevail, being the more recent expression of legislative will.17 Statutes must be so
construed and harmonized with other statutes as to form a uniform system of
jurisprudence.18 However, if several laws cannot be harmonized, the earlier statute must yield to the
later enactment. The later law is the latest expression of the legislative will.19

We hold that Section 8(g) of R.A. No. 9262, being a later enactment, should be construed as laying
down an exception to the general rule above-stated that retirement benefits are exempt from
execution. The law itself declares that the court shall order the withholding of a percentage of the
income or salary of the respondent by the employer, which shall be automatically remitted directly to
the woman "[n]otwithstanding other laws to the contrary."

Petitioner further contends that the directive under the TPO to segregate a portion of S/Sgt. Yahon’s
retirement benefits was illegal because said moneys remain as public funds, citing the case of Pacific
Products v. Ong.20 In that case, this Court sustained the CA when it held that the garnishment of the
amount of ₱10,500 payable to BML Trading and Supply while it was still in the possession of the
Bureau of Telecommunications was illegal and therefore, null and void. The CA therein relied on the
previous rulings in Director of Commerce and Industry v. Concepcion21 and Avendano v. Alikpala, et
al.22 wherein this Court declared null and void the garnishment of the salaries of government
employees.

Citing the two aforementioned cases, we thus declared in Pacific Products:

A rule, which has never been seriously questioned, is that money in the hands of public officers,
although it may be due government employees, is not liable to the creditors of these employees in the
process of garnishment. One reason is, that the State, by virtue of its sovereignty may not be sued in
its own courts except by express authorization by the Legislature, and to subject its officers to
garnishment would be to permit indirectly what is prohibited directly. Another reason is that moneys
sought to be garnished, as long as they remain in the hands of the disbursing officer of the
Government, belong to the latter, although the defendant in garnishment may be entitled to a specific
portion thereof. And still another reason which covers both of the foregoing is that every consideration
of public policy forbids it.23

We disagree.
Section 8(g) of R.A. No. 9262 used the general term "employer," which includes in its coverage the
military institution, S/Sgt. Yahon’s employer. Where the law does not distinguish, courts should not
distinguish. Thus, Section 8(g) applies to all employers, whether private or government.

It bears stressing that Section 8(g) providing for spousal and child support, is a support enforcement
legislation.1âwphi1 In the United States, provisions of the Child Support Enforcement Act24 allow
garnishment of certain federal funds where the intended recipient has failed to satisfy a legal
obligation of child support. As these provisions were designed "to avoid sovereign immunity
problems" and provide that "moneys payable by the Government to any individual are subject to child
support enforcement proceedings," the law is clearly intended to "create a limited waiver of sovereign
immunity so that state courts could issue valid orders directed against Government agencies
attaching funds in their possession."25

This Court has already ruled that R.A. No. 9262 is constitutional and does not violate the equal
protection clause. In Garcia v. Drilon26 the issue of constitutionality was raised by a husband after the
latter failed to obtain an injunction from the CA to enjoin the implementation of a protection order
issued against him by the RTC. We ruled that R.A. No. 9262 rests on real substantial distinctions
which justify the classification under the law: the unequal power relationship between women and
men; the fact that women are more likely than men to be victims of violence; and the widespread bias
and prejudice against women.

We further held in Garcia that the classification is germane to the purpose of the law, viz:

The distinction between men and women is germane to the purpose of R.A. 9262, which is to address
violence committed against women and children, spelled out in its Declaration of Policy, as follows:

SEC. 2. Declaration of Policy.– It is hereby declared that the State values the dignity of women and
children and guarantees full respect for human rights. The State also recognizes the need to protect
the family and its members particularly women and children, from violence and threats to their
personal safety and security.

Towards this end, the State shall exert efforts to address violence committed against women and
children in keeping with the fundamental freedoms guaranteed under the Constitution and the
provisions of the Universal Declaration of Human Rights, the Convention on the Elimination of All
Forms of Discrimination Against Women, Convention on the Rights of the Child and other
international human rights instruments of which the Philippines is a party.27

Under R.A. No. 9262, the provision of spousal and child support specifically address one form of
violence committed against women – economic abuse.

D. "Economic abuse" refers to acts that make or attempt to make a woman financially dependent
which includes, but is not limited to the following:

1. Withdrawal of financial support or preventing the victim from engaging in any legitimate
profession, occupation, business or activity, except in cases wherein the other spouse/partner
objects on valid, serious and moral grounds as defined in Article 73 of the Family Code;

2. Deprivation or threat of deprivation of financial resources and the right to the use and
enjoyment of the conjugal, community or property owned in common;

3. Destroying household property;

 4. Controlling the victims' own money or properties or solely controlling the conjugal money or
properties.28

The relief provided in Section 8(g) thus fulfills the objective of restoring the dignity of women who are
victims of domestic violence and provide them continued protection against threats to their personal
safety and security.

"The scope of reliefs in protection orders is broadened to ensure that the victim or offended party is
afforded all the remedies necessary to curtail access by a perpetrator to the victim. This serves to
safeguard the victim from greater risk of violence; to accord the victim and any designated family or
household member safety in the family residence, and to prevent the perpetrator from committing
acts that jeopardize the employment and support of the victim. It also enables the court to award
temporary custody of minor children to protect the children from violence, to prevent their abduction
by the perpetrator and to ensure their financial support."29

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated November 29, 2011 and
Resolution dated March 9, 2012 of the Court of Appeals Mindanao Station in CA-G.R. SP No. 02953-
MIN are AFFIRMED and UPHELD.

No costs.

SO ORDERED.
 G.R. No. 115245 July 11, 1995

JUANITO C. PILAR, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court assailing the Resolution
dated April 28, 1994 of the Commission on Elections (COMELEC) in UND No. 94-040.

On March 22, 1992, petitioner Juanito C. Pilar filed his certificate of candidacy for the position of
member of the Sangguniang Panlalawigan of the Province of Isabela.

On March 25, 1992, petitioner withdrew his certificate of candidacy.

In M.R. Nos. 93-2654 and 94-0065 dated November 3, 1993 and February 13, 1994 respectively, the
COMELEC imposed upon petitioner the fine of Ten Thousand Pesos (P10,000.00) for failure to file
his statement of contributions and expenditures.

In M.R. No. 94-0594 dated February 24, 1994, the COMELEC denied the motion for reconsideration
of petitioner and deemed final M.R. Nos. 93-2654 and 94-0065 (Rollo, p. 14).

Petitioner went to the COMELEC En Banc (UND No. 94-040), which denied the petition in a
Resolution dated April 28, 1994 (Rollo, pp. 10-13).

Hence, this petition for certiorari.

We dismiss the petition.

II

Section 14 of R.A. No. 7166 entitled "An Act Providing for Synchronized National and Local Elections
and for Electoral Reforms, Authorizing Appropriations Therefor, and for Other Purposes" provides as
follows:

Statement of Contributions and Expenditures: Effect of Failure to File Statement. Every

candidate and treasurer of the political party shall, within thirty (30) days after the day of
the election, file in duplicate with the offices of the Commission the full, true and
itemized statement of all contributions and expenditures in connection with the election.

No person elected to any public office shall enter upon the duties of his office until he
has filed the statement of contributions and expenditures herein required.

The same prohibition shall apply if the political party which nominated the winning
candidate fails to file the statement required herein within the period prescribed by this
Act.
 Except candidates for elective barangay office, failure to file the statements or reports in
connection with electoral contributions and expenditures as required herein shall
constitute an administrative offense for which the offenders shall be liable to pay an
administrative fine ranging from One Thousand Pesos ( P1,000.00) to Thirty Thousand
Pesos (P30,000.00), in the discretion of the Commission.

The fine shall be paid within thirty (30) days from receipt of notice of such failure;
otherwise, it shall be enforceable by a writ of execution issued by the Commission
against the properties of the offender.

It shall be the duty of every city or municipal election registrar to advise in writing, by
personal delivery or registered mail, within five (5) days from the date of election all
candidates residing in his jurisdiction to comply with their obligation to file their
statements of contributions and expenditures.

For the commission of a second or subsequent offense under this Section, the
administrative fine shall be from Two Thousand Pesos (P2,000.00) to Sixty Thousand
Pesos (P60,000.00), in the discretion of the Commission. In addition, the offender shall
be subject to perpetual disqualification to hold public office (Emphasis supplied).

To implement the provisions of law relative to election contributions and expenditures, the COMELEC
promulgated on January 13, 1992 Resolution No. 2348 (Re: Rules and Regulations Governing
Electoral Contributions and Expenditures in Connection with the National and Local Elections on
May 11, 1992). The pertinent provisions of said Resolution are:

Sec. 13. Statement of contributions and expenditures: Reminders to candidates to file

statements. Within five (5) days from the day of the election, the Law Department of the
Commission, the regional election director of the National Capital Region, the provincial
election supervisors and the election registrars shall advise in writing by personal
delivery or registered mail all candidates who filed their certificates of candidacy with
them to comply with their obligation to file their statements of contributions and
expenditures in connection with the elections. Every election registrar shall also
advise all candidates residing in his jurisdiction to comply with said obligation
(Emphasis supplied).

Sec. 17. Effect of failure to file statement. (a) No person elected to any public office
shall enter upon the duties of his office until he has filed the statement of contributions
and expenditures herein required.

The same prohibition shall apply if the political party which nominated the winning
candidates fails to file the statement required within the period prescribed by law.

(b) Except candidates for elective barangay office, failure to file statements or reports in
connection with the electoral contributions and expenditures as required herein shall
constitute an administrative offense for which the offenders shall be liable to pay an
administrative fine ranging from One Thousand Pesos (P1,000) to Thirty Thousand
Pesos (P30,000), in the discretion of the Commission.

The fine shall be paid within thirty (30) days from receipt of notice of such failure;
otherwise, it shall be enforceable by a writ of execution issued by the Commission
against the properties of the offender.
 For the commission of a second or subsequent offense under this section, the
administrative fine shall be from Two Thousand Pesos (P2,000) to Sixty Thousand
Pesos (P60,000), in the discretion of the Commission. In addition, the offender shall be
subject to perpetual disqualification to hold public office.

Petitioner argues that he cannot be held liable for failure to file a statement of contributions and
expenditures because he was a "non-candidate," having withdrawn his certificates of candidacy three
days after its filing. Petitioner posits that "it is . . . clear from the law that candidate must have entered
the political contest, and should have either won or lost" (Rollo, p. 39).

Petitioner's argument is without merit.

Section 14 of R.A. No. 7166 states that "every candidate" has the obligation to file his statement of
contributions and expenditures.

Well-recognized is the rule that where the law does not distinguish, courts should not distinguish, Ubi
lex non distinguit nec nos distinguere debemos (Philippine British Assurance Co. Inc. v. Intermediate
Appellate Court, 150 SCRA 520 [1987]; cf Olfato v. Commission on Elections, 103 SCRA 741
[1981]). No distinction is to be made in the application of a law where none is indicated (Lo Cham v.
Ocampo, 77 Phil. 636 [1946]).

In the case at bench, as the law makes no distinction or qualification as to whether the candidate
pursued his candidacy or withdrew the same, the term "every candidate" must be deemed to refer not
only to a candidate who pursued his campaign, but also to one who withdrew his candidacy.

The COMELEC, the body tasked with the enforcement and administration of all laws and regulations
relative to the conduct of an election, plebiscite, initiative, referendum, and recall (The Constitution of
the Republic of the Philippines, Art. IX(C), Sec. 2[1]), issued Resolution No. 2348 in implementation
or interpretation of the provisions of Republic Act No. 7166 on election contributions and
expenditures. Section 13 of Resolution No. 2348 categorically refers to "all candidates who filed their
certificates of candidacy."

Furthermore, Section 14 of the law uses the word "shall." As a general rule, the use of the word
"shall" in a statute implies that the statute is mandatory, and imposes a duty which may be enforced ,
particularly if public policy is in favor of this meaning or where public interest is involved. We apply the
general rule (Baranda v. Gustilo, 165 SCRA 757 [1988]; Diokno v. Rehabilitation Finance
Corporation, 91 Phil. 608 [1952]).

The state has an interest in seeing that the electoral process is clean, and ultimately expressive of the
true will of the electorate. One way of attaining such objective is to pass legislation regulating
contributions and expenditures of candidates, and compelling the publication of the same. Admittedly,
contributions and expenditures are made for the purpose of influencing the results of the elections
(B.P. Blg. 881, Sec. 94; Resolution No. 2348, Sec. 1). Thus, laws and regulations prescribe what
contributions are prohibited (B.P. Blg. 881, Sec. 95, Resolution No. 2348, Sec. 4), or unlawful (B.P.
Blg. 881, Sec. 96), and what expenditures are authorized (B.P. Blg. 881, Sec. 102; R.A. No. 7166,
Sec. 13; Resolution No. 2348, Sec. 7) or lawful (Resolution No. 2348, Sec. 8).

Such statutes are not peculiar to the Philippines. In "corrupt and illegal practices acts" of several
states in the United States, as well as in federal statutes, expenditures of candidates are regulated by
requiring the filing of statements of expenses and by limiting the amount of money that may be spent
by a candidate. Some statutes also regulate the solicitation of campaign contributions (26 Am Jur 2d,
Elections § 287). These laws are designed to compel publicity with respect to matters contained in
the statements and to prevent, by such publicity, the improper use of moneys devoted by candidates
to the furtherance of their ambitions (26 Am Jur 2d, Elections § 289). These statutes also enable
voters to evaluate the influences exerted on behalf of candidates by the contributors, and to furnish
evidence of corrupt practices for annulment of elections (Sparkman v. Saylor [Court of Appeals of
Kentucky], 180 Ky. 263, 202 S.W. 649 [1918]).

State courts have also ruled that such provisions are mandatory as to the requirement of filing (State
ex rel. Butchofsky v. Crawford [Court of Civil Appeals of Texas], 269 S.W. 2d 536 [1954]; Best v.
Sidebottom, 270 Ky. 423,109 S.W. 2d 826 [1937]; Sparkman v. Saylor, supra.)

It is not improbable that a candidate who withdrew his candidacy has accepted contributions and
incurred expenditures, even in the short span of his campaign. The evil sought to be prevented by the
law is not all too remote.

It is notesworthy that Resolution No. 2348 even contemplates the situation where a candidate may
not have received any contribution or made any expenditure. Such a candidate is not excused from
filing a statement, and is in fact required to file a statement to that effect. Under Section 15 of
Resolution No. 2348, it is provided that "[i]f a candidate or treasurer of the party has received no
contribution, made no expenditure, or has no pending obligation, the statement shall reflect such
fact."

Lastly, we note that under the fourth paragraph of Section 73 of the B.P. Blg. 881 or the Omnibus
Election Code of the Philippines, it is provided that "[t]he filing or withdrawal of certificate of candidacy
shall not affect whatever civil, criminal or administrative liabilities which a candidate may have
incurred." Petitioner's withdrawal of his candidacy did not extinguish his liability for the administrative
fine.

WHEREFORE, the petition is DISMISSED.

 G.R. No. 110898             February 20, 1996

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. JUDGE ANTONIO C. EVANGELISTA, as Presiding Judge of Branch XXI, 10th Judicial
Region, RTC of Misamis Oriental, Cagayan de Oro City, and GRILDO S.
TUGONON, respondents.

DECISION

MENDOZA, J.:

Private respondent Grildo S. Tugonan was charged with frustrated homicide in the Regional Trial
Court of Misamis Oriental (Branch 21), the information against him alleging

That on or about the 26th day of May, 1988, at more or less 9:00 o'clock in the evening at
Barangay Publican+.3, Municipality of Villanueva, Province of Misamis Oriental, Republic of
the Philippines and within the jurisdiction of this Honorable Court, the above-named accused
with intent to kill and with the use of a knife, which he was then conveniently provided of, did
then and there willfully, unlawfully and feloniously assault, attack and stab Roque T. Bade
thereby inflicting upon him the following injuries, to wit:

Stab wound, right iliac area,

0.5 cm. penetrating non
perforating lacerating posterior
peritoneum, 0,5 cm.

thus performing all the acts of execution which would produce the crime of Homicide as a
consequence but which, nevertheless, did not produce it by reason of causes independent of
the will of the accused, that is by timely medical attendance which prevented his death.

CONTRARY TO and in violation of Article 249 in relation to Article 6 of the Revised Penal
Code.

After trial he was found guilty and sentenced to one year of prision correccional in its minimum period
and ordered to pay to the offended party P5,000.00 for medical expense, without subsidiary
imprisonment, and the costs. The RTC appreciated in his favor the privileged mitigating
circumstances of incomplete self-defense and the mitigating circumstance of voluntary surrender.

On appeal the Court of Appeals affirmed private respondent's conviction but modified his sentence by
imposing on him an indeterminate penalty of 2 months of arresto mayor, as minimum, to 2 years and
4 months of prision correccional, as maximum.1

On December 21, 1992, respondent Judge Antonio C. Evangelista of the RTC set the case for
repromulgation on January 4, 1993.

On December 28, 1992, private respondent filed a petition for probation,2 alleging that (1) he
possessed all the qualifications and none of the disqualifications for probation under P.D. No. 968, as
amended; (2) the Court of Appeals has in fact reduced the penalty imposed on him by the trial court;
(3) in its resolution, the Court of Appeals took no action on a petition for probation which he had
earlier filed with it so that the petition could be filed with the trial court; (4) in the trial court's decision,
two mitigating circumstances of incomplete self-defense and voluntarily surrender were appreciated
in his favor; and (5) in Santos To v. Paño,3 the Supreme Court upheld the right of the accused to
probation notwithstanding the fact that he had appealed from his conviction by the trial court.

On February 2, 1993, the RTC ordered private respondent to report for interview to the Provincial
Probation Officer. The Provincial Probation Officer on the other hand was required to submit his
report with recommendation to the court within 60 days.4

On February 18, 1993, Chief Probation and Parole Officer Isias B. Valdehueza recommended denial
of private respondent's application for probation on the ground that by appealing the sentence of the
trial court, when he could have then applied for probation, private respondent waived the right to
make his application. The Probation Officer thought the present case to be distinguishable
from Santos To v. Paño in the sense that in this case the original sentence imposed on private
respondent by the trial court (1 year of imprisonment) was probationable and there was no reason for
private respondent not to have filed his application for probation then, whereas in Santos To
v. Paño the penalty only became probationable after it had been reduced as a result of the appeal.

On April 16, 1993 Valdehueza reiterated5 his "respectful recommendation that private respondent's
application for probation be denied and that a warrant of arrest be issued for him to serve his
sentence in jail."

The RTC set aside the Probation Officer's recommendation and granted private respondent's
application for probation in its order of April 23, 1993,6 Hence this petition by the prosecution.

The issue in this case is whether the RTC committed a grave abuse of its discretion by granting
private respondent's application for probation despite the fact that he had appealed from the
judgment of his conviction of the trial court.

The Court holds that it did.

Until its amendment by P.D. No. 1990 in 1986, it was possible under P.D. No. 986, otherwise known
as the Probation Law, for the accused to take his chances on appeal by allowing probation to be
granted even after an accused had appealed his sentence and failed to obtain an acquittal, just so
long as he had not yet started to serve the sentence.7 Accordingly, in Santos To v. Paño, it was held
that the fact that the accused had appealed did not bar him from applying for probation especially
because it was as a result of the appeal that his sentence was reduced and made the probationable
limit.

The law was, however, amended by P.D. No. 1990 which took effect on January 15, 19868 precisely
to put a stop to the practice of appealing from judgments of conviction even if the sentence is
probationable for the purpose of securing an acquittal and applying for probation only if the accused
fails in his bid. Thus, as amended by P.D. No, 1990, §4 of the Probation Law now reads:

§4. Grant of Probation. Subject to the provisions of this Decree, the trial court may, after it shall
have convicted and sentenced a defendant, and upon application by said defendant within the
period for perfecting an appeal, suspend the execution of the sentence and place the
defendant on probation for such period and upon such terms and conditions as it may deem
best; Provided, That no application for probation shall be entertained or granted if the
defendant has perfected the appeal from the judgment of conviction.

Probation may be granted whether the sentence imposes a term of imprisonment or a fine
only. An application for probation shall be filed with the trial court. The filing of the application
shall be deemed a waiver of the right to appeal.
 An order granting or denying probation shall not be appealable. (Emphasis added).

Since private respondent filed his application for probation on December 28, 1992, after P.D. No.
1990 had taken effect,9 it is covered by the prohibition that "no application for probation shall be
entertained or granted if the defendant has perfected the appeal from the judgment of conviction" and
that "the filing of the application shall be deemed a waiver of the right to appeal," Having appealed
from the judgment of the trial court and having applied for probation only after the Court of Appeals
had affirmed his conviction, private respondent was clearly precluded from the benefits of probation.

Private respondent argues, however, that a distinction should be drawn between meritorious appeals
(like his appeal notwithstanding the appellate court's affirmance of his conviction) and unmeritorious
appeals. But the law does not make any distinction and so neither should the Court. In fact if an
appeal is truly meritorious the accused would be set free and not only given probation. Private
respondent's original sentence (1 year of prision correccional in its minimum period) and the modified
sentence imposed by the Court of Appeals (2 months of arresto mayor, as minimum, to 2 years and 4
months of prision correccional, as maximum) are probationable. Thus the fact that he appealed
meant that private respondent was taking his chances which the law precisely frowns upon. This is
precisely the evil that the amendment in P.D. No. 1990 sought to correct, since in the words of the
preamble to the amendatory law, "probation was not intended as an escape hatch and should not be
used to obstruct and delay the administration of justice, but should be availed of at the first
opportunity by offenders who are willing to be reformed and rehabilitated."

The ruling of the RTC that "[h]aving not perfected an appeal against the Court of Appeals decision,
[private respondent] is, therefore, not covered by [the amendment in] P.D. 1990" is an obvious
misreading of the law. The perfection of the appeal referred in the law refers to the .appeal taken from
a judgment of conviction by the trial court and not that of the appellate court, since under the law an
application for probation is filed with the trial court which can only grant the same "after it shall have
convicted and sentenced [the] defendant, and upon application by said defendant within the period for
perfecting an appeal. "Accordingly, in Llamado v. Court of Appeals, 10 it was held that the petitioner
who had appealed his sentence could not subsequently apply for probation.

WHEREFORE, the petition is GRANTED and the order of April 23, 1993 of the Regional Trial Court of
Misamis Oriental (Branch 21) granting probation to private respondent Grildo S. Tugonon is SET
ASIDE.

SO ORDERED.
G.R. No. 87416             April 8, 1991

CECILIO S. DE VILLA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, PEOPLE OF THE PHILIPPINES, HONORABLE JOB B.
MADAYAG, and ROBERTO Z. LORAYES, respondents.

San Jose Enriquez, Lacas Santos & Borje for petitioner.

Eduardo R. Robles for private respondent.

PARAS, J.:

This petition for review on certiorari seeks to reverse and set aside the decision* of the Court of
Appeals promulgated on February 1, 1989 in CA-G.R. SP No. 16071 entitled "Cecilio S. de Villa vs.
Judge Job B. Madayag, etc. and Roberto Z. Lorayes," dismissing the petition for certiorari filed
therein.

The factual backdrop of this case, as found by the Court of Appeals, is as follows:

On October 5, 1987, petitioner Cecilio S. de Villa was charged before the Regional Trial Court
of the National Capital Judicial Region (Makati, Branch 145) with violation of Batas Pambansa
Bilang 22, allegedly committed as follows:

That on or about the 3rd day of April 1987, in the municipality of Makati, Metro Manila,
Philippines and within the jurisdiction of this Honorable Court, the above-named
accused, did, then and there willfully, unlawfully and feloniously make or draw and issue
to ROBERTO Z. LORAYEZ, to apply on account or for value a Depositors Trust
Company Check No. 3371 antedated March 31, 1987, payable to herein complainant in
the total amount of U.S. $2,500.00 equivalent to P50,000.00, said accused well knowing
that at the time of issue he had no sufficient funds in or credit with drawee bank for
payment of such check in full upon its presentment which check when presented to the
drawee bank within ninety (90) days from the date thereof was subsequently dishonored
for the reason "INSUFFICIENT FUNDS" and despite receipt of notice of such dishonor
said accused failed to pay said ROBERTO Z. LORAYEZ the amount of P50,000.00 of
said check or to make arrangement for full payment of the same within five (5) banking
days after receiving said notice.

After arraignment and after private respondent had testified on direct examination, petitioner
moved to dismiss the Information on the following grounds: (a) Respondent court has no
jurisdiction over the offense charged; and (b) That no offense was committed since the check
involved was payable in dollars, hence, the obligation created is null and void pursuant to
Republic Act No. 529 (An Act to Assure Uniform Value of Philippine Coin and Currency).

On July 19, 1988, respondent court issued its first questioned orders stating:

Accused's motion to dismiss dated July 5, 1988, is denied for lack of merit.

Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are either
drawn and issued in the Philippines though payable outside thereof, or made payable
 and dishonored in the Philippines though drawn and issued outside thereof, are within
the coverage of said law. The law likewise applied to checks drawn against current
accounts in foreign currency.

Petitioner moved for reconsideration but his motion was subsequently denied by respondent
court in its order dated September 6, 1988, and which reads:

Accused's motion for reconsideration, dated August 9, 1988, which was opposed by the
prosecution, is denied for lack of merit.1âwphi1

The Bouncing Checks Law is applicable to checks drawn against current accounts in
foreign currency (Proceedings of the Batasang Pambansa, February 7, 1979, p. 1376,
cited in Makati RTC Judge (now Manila City Fiscal) Jesus F. Guerrero's The
Ramifications of the Law on Bouncing Checks, p. 5). (Rollo, Annex "A", Decision, pp.
20-22).

A petition for certiorari seeking to declare the nullity of the aforequoted orders dated July 19,
1988 and September 6, 1988 was filed by the petitioner in the Court of Appeals wherein he
contended:

(a) That since the questioned check was drawn against the dollar account of petitioner
with a foreign bank, respondent court has no jurisdiction over the same or with accounts
outside the territorial jurisdiction of the Philippines and that Batas Pambansa Bilang 22
could have not contemplated extending its coverage over dollar accounts;

(b) That assuming that the subject check was issued in connection with a private
transaction between petitioner and private respondent, the payment could not be legally
paid in dollars as it would violate Republic Act No. 529; and

(c) That the obligation arising from the issuance of the questioned check is null and void
and is not enforceable with the Philippines either in a civil or criminal suit. Upon such
premises, petitioner concludes that the dishonor of the questioned check cannot be said
to have violated the provisions of Batas Pambansa Bilang 22. (Rollo, Annex "A",
Decision, p. 22).

On February 1, 1989, the Court of Appeals rendered a decision, the decretal portion of which
reads:

WHEREFORE, the petition is hereby dismissed. Costs against petitioner.

SO ORDERED. (Rollo, Annex "A", Decision, p. 5)

A motion for reconsideration of the said decision was filed by the petitioner on February 7,
1989 (Rollo, Petition, p. 6) but the same was denied by the Court of Appeals in its resolution
dated March 3, 1989 (Rollo, Annex "B", p. 26).

Hence, this petition.

In its resolution dated November 13, 1989, the Second Division of this Court gave due course
to the petition and required the parties to submit simultaneously their respective memoranda
(Rollo, Resolution, p. 81).
The sole issue in this case is whether or not the Regional Trial Court of Makati has jurisdiction
over the case in question.

The petition is without merit.

Jurisdiction is the power with which courts are invested for administering justice, that is, for
hearing and deciding cases (Velunta vs. Philippine Constabulary, 157 SCRA 147 [1988]).

Jurisdiction in general, is either over the nature of the action, over the subject matter, over the
person of the defendant, or over the issues framed in the pleadings (Balais vs. Balais, 159
SCRA 37 [1988]).

Jurisdiction over the subject matter is determined by the statute in force at the time of
commencement of the action (De la Cruz vs. Moya, 160 SCRA 538 [1988]).

The trial court's jurisdiction over the case, subject of this review, can not be questioned.

Sections 10 and 15(a), Rule 110 of the Rules of Court specifically provide that:

Sec. 10. Place of the commission of the offense. The complaint or information is

sufficient if it can be understood therefrom that the offense was committed or some of
the essential ingredients thereof occured at some place within the jurisdiction of the
court, unless the particular place wherein it was committed constitutes an essential
element of the offense or is necessary for identifying the offense charged.

Sec. 15. Place where action is to be instituted. (a) Subject to existing laws, in all criminal
prosecutions the action shall be instituted and tried in the court of the municipality or
territory where the offense was committed or any of the essential ingredients thereof
took place.

In the case of People vs. Hon. Manzanilla (156 SCRA 279 [1987] cited in the case of Lim vs.
Rodrigo, 167 SCRA 487 [1988]), the Supreme Court ruled "that jurisdiction or venue is
determined by the allegations in the information."

The information under consideration specifically alleged that the offense was committed in
Makati, Metro Manila and therefore, the same is controlling and sufficient to vest jurisdiction
upon the Regional Trial Court of Makati. The Court acquires jurisdiction over the case and over
the person of the accused upon the filing of a complaint or information in court which initiates a
criminal action (Republic vs. Sunga, 162 SCRA 191 [1988]).

Moreover, it has been held in the case of Que v. People of the Philippines (154 SCRA 160
[1987] cited in the case of People vs. Grospe, 157 SCRA 154 [1988]) that "the determinative
factor (in determining venue) is the place of the issuance of the check."

On the matter of venue for violation of Batas Pambansa Bilang 22, the Ministry of
Justice, citing the case of People vs. Yabut (76 SCRA 624 [1977], laid down the following
guidelines in Memorandum Circular No. 4 dated December 15, 1981, the pertinent portion of
which reads:

(1) Venue of the offense lies at the place where the check was executed and delivered;
(2) the place where the check was written, signed or dated does not necessarily fix the
 place where it was executed, as what is of decisive importance is the delivery thereof
which is the final act essential to its consummation as an obligation; . . . (Res. No. 377,
s. 1980, Filtex Mfg. Corp. vs. Manuel Chua, October 28, 1980)." (See The Law on
Bouncing Checks Analyzed by Judge Jesus F. Guerrero, Philippine Law Gazette, Vol.
7. Nos. 11 & 12, October-December, 1983, p. 14).

It is undisputed that the check in question was executed and delivered by the petitioner to
herein private respondent at Makati, Metro Manila.

However, petitioner argues that the check in question was drawn against the dollar account of
petitioner with a foreign bank, and is therefore, not covered by the Bouncing Checks Law (B.P.
Blg. 22).

But it will be noted that the law does not distinguish the currency involved in the case. As the
trial court correctly ruled in its order dated July 5, 1988:

Under the Bouncing Checks Law (B.P. Blg. 22), foreign checks, provided they are either
drawn and issued in the Philippines though payable outside thereof . . . are within the
coverage of said law.

It is a cardinal principle in statutory construction that where the law does not distinguish courts
should not distinguish.1âwphi1 Parenthetically, the rule is that where the law does not make
any exception, courts may not except something unless compelling reasons exist to justify it
(Phil. British Assurance Co., Inc. vs. IAC, 150 SCRA 520 [1987]).

More importantly, it is well established that courts may avail themselves of the actual
proceedings of the legislative body to assist in determining the construction of a statute of
doubtful meaning (Palanca vs. City of Manila, 41 Phil. 125 [1920]). Thus, where there is doubts
as to what a provision of a statute means, the meaning put to the provision during the
legislative deliberation or discussion on the bill may be adopted (Arenas vs. City of San Carlos,
82 SCRA 318 [1978]).

The records of the Batasan, Vol. III, unmistakably show that the intention of the lawmakers is
to apply the law to whatever currency may be the subject thereof. The discussion on the floor
of the then Batasang Pambansa fully sustains this view, as follows:

x x x           x x x          x x x

THE SPEAKER. The Gentleman from Basilan is recognized.

MR. TUPAY. Parliamentary inquiry, Mr. Speaker.

THE SPEAKER. The Gentleman may proceed.

MR. TUPAY. Mr. Speaker, it has been mentioned by one of the Gentlemen who
interpellated that any check may be involved, like U.S. dollar checks, etc. We are talking
about checks in our country. There are U.S. dollar checks, checks, in our currency, and
many others.

THE SPEAKER. The Sponsor may answer that inquiry.

 MR. MENDOZA. The bill refers to any check, Mr. Speaker, and this check may be a
check in whatever currency. This would not even be limited to U.S. dollar checks. The
check may be in French francs or Japanese yen or deutschunorhs. (sic.) If drawn, then
this bill will apply.

MR TUPAY. So it include U.S. dollar checks.

MR. MENDOZA. Yes, Mr. Speaker.

x x x           x x x          x x x

(p. 1376, Records of the Batasan, Volume III; Emphasis supplied).

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit.

G.R. No. L-14787             January 28, 1961

COLGATE-PALMOLIVE PHILIPPINE, INC., petitioner,

vs.
HON. PEDRO M. GIMENEZ as Auditor General and ISMAEL MATHAY as AUDITOR OF THE
CENTRAL BANK OF THE PHILIPPINES, respondents.

Ross, Selph and Carrascoso for petitioner.

Office of the Solicitor General for respondents.

GUTIERREZ DAVID, J.:

The petitioner Colgate-Palmolive Philippines, Inc. is a corporation duly organized and existing under
Philippine laws engaged in the manufacture of toilet preparations and household remedies. On
several occasions, it imported from abroad various materials such as irish moss extract, sodium
benzoate, sodium saccharinate precipitated calcium carbonate and dicalcium phosphate, for use as
stabilizers and flavoring of the dental cream it manufactures. For every importation made of these
materials, the petitioner paid to the Central Bank of the Philippines the 17% special excise tax on the
foreign exchange used for the payment of the cost, transportation and other charges incident thereto,
pursuant to Republic Act No. 601, as amended, commonly known as the Exchange Tax Law.

On March 14, 1956, the petitioner filed with the Central Bank three applications for refund of the 17%
special excise tax it had paid in the aggregate sum of P113,343.99. The claim for refund was based
on section 2 of Republic Act 601, which provides that "foreign exchange used for the payment of the
cost, transportation and/or other charges incident to the importation into the Philippines of . . .
stabilizer and flavors . . . shall be refunded to any importer making application therefor, upon
satisfactory proof of actual importation under the rules and regulations to be promulgated pursuant to
section seven thereof." After the applications were processed by the officer-in-charge of the
Exchange Tax Administration of the Central Bank, that official advised, the petitioner that of the total
sum of P113,343.99 claimed by it for refund, the amount of P23,958.13 representing the 17% special
excise tax on the foreign exchange used to import irish moss extract, sodium benzoate and
precipitated calcium carbonate had been approved. The auditor of the Central Bank, however,
refused to pass in audit its claims for refund even for the reduced amount fixed by the Officer-in-
Charge of the Exchange Tax Administration, on the theory that toothpaste stabilizers and flavors are
not exempt under section 2 of the Exchange Tax Law.

Petitioner appealed to the Auditor General, but the latter or, December 4, 1958 affirmed the ruling of
the auditor of the Central Bank, maintaining that the term "stabilizer and flavors" mentioned in section
2 of the Exchange Tax Law refers only to those used in the preparation or manufacture of food or
food products. Not satisfied, the petitioner brought the case to this Court thru the present petition for
review.

The decisive issue to be resolved is whether or not the foreign exchange used by petitioner for the
importation of dental cream stabilizers and flavors is exempt from the 17% special excise tax imposed
by the Exchange Tax Law, (Republic Act No. 601) so as to entitle it to refund under section 2 thereof,
which reads as follows:

SEC, 2. The tax collected under the preceding section on foreign exchange used for the
payment of the cost, transportation and/or other charges incident to importation into the
Philippines of rice, flour, canned milk, cattle and beef, canned fish, soya beans, butterfat,
chocolate, malt syrup, tapioca, stabilizer and flavors, vitamin concentrate, fertilizer, poultry
feed; textbooks, reference books, and supplementary readers approved by the Board of
 Textbooks and/or established public or private educational institutions; newsprint imported by
or for publishers for use in the publication of books, pamphlets, magazines and newspapers;
book paper, book cloth, chip board imported for the printing of supplementary readers
(approved by the Board of Textbooks) to be supplied to the Government under contracts
perfected before the approval of this Act, the quantity thereof to be certified by the Director of
Printing; anesthetics, anti-biotics, vitamins, hormones, x-ray films, laboratory reagents,
biologicals, dental supplies, and pharmaceutical drugs necessary for compounding medicines;
medical and hospital supplies listed in the appendix to this Act, in quantities to be certified by
the Director of Hospitals as actually needed by the hospitals applying therefor; drugs and
medicines listed in the said appendix; and such other drugs and medicines as may be certified
by the Secretary of Health from time to time to promote and protect the health of the people of
the Philippines shall be refunded to any importer making application therefor, upon satisfactory
proof of actual importation under the rules and regulations to be promulgated pursuant to
section seven thereof." (Emphasis supplied.)

The ruling of the Auditor General that the term "stabilizer and flavors" as used in the law refers only to
those materials actually used in the preparation or manufacture of food and food products is based,
apparently, on the principle of statutory construction that "general terms may be restricted by specific
words, with the result that the general language will be limited by the specific language which
indicates the statute's object and purpose." (Statutory Construction by Crawford, 1940 ed. p. 324-
325.) The rule, however, is, in our opinion, applicable only to cases where, except for one general
term, all the items in an enumeration belong to or fall under one specific class. In the case at bar, it is
true that the term "stabilizer and flavors" is preceded by a number of articles that may be classified as
food or food products, but it is likewise true that the other items immediately following it do not belong
to the same classification. Thus "fertilizer" and "poultry feed" do not fall under the category of food or
food products because they are used in the farming and poultry industries, respectively. "Vitamin
concentrate" appears to be more of a medicine than food or food product, for, as matter of fact,
vitamins are among those enumerated in the list of medicines and drugs appearing in the appendix to
the law. It should also here be stated that "cattle", which is among those listed preceding the term in
question, includes not only those intended for slaughter but also those for breeding purposes. Again,
it is noteworthy that under, Republic Act No. 814 amending the above-quoted section of Republic Act
No. 601, "industrial starch", which does not always refer to food for human consumption, was added
among the items grouped with "stabilizer and flavors". Thus, on the basis of the grouping of the
articles alone, it cannot validly be maintained that the term "stabilizer and flavors" as used in the
above-quoted provision of the Exchange Tax Law refers only to those used in the manufacture of
food and food products. This view is supported by the principle "Ubi lex non distinguish nec nos
distinguire debemos", or "where the law does not distinguish, neither do we distinguish". (Ligget &
Myers Tobacco Company vs. Collector of Internal Revenue, 53 Off. Gaz. No. 15, page 4831). Since
the law does not distinguish between "stabilizer and flavors" used in the preparation of food and those
used in the manufacture of toothpaste or dental cream, we are not authorized to make any distinction
and must construe the words in their general sense. The rule of construction that general and
unlimited terms are restrained and limited by particular recitals when used in connection with them,
does not require the rejection of general terms entirely. It is intended merely as an aid in ascertaining
the intention of the legislature and is to be taken in connection with other rules of construction. (See
Handbook of the Construction and Interpretation of Laws by Black, p. 215.216, 2nd ed.)

Having arrived at the above conclusion, we deem it now idle to pass upon the other questions raised
by the parties.

WHEREFORE, the decision under review is reversed and the respondents are hereby ordered to
audit petitioners applications for refund which were approved by the Officer-in-Charge of the
Exchange Tax Administration in the total amount of P23,958.13.
 [G.R. No. 89483. August 30, 1990.]

REPUBLIC OF THE PHILIPPINES THRU: THE PRESIDENTIAL COMMISSION ON GOOD

GOVERNMENT (PCGG), AFP ANTI-GRAFT BOARD, COL. ERNESTO A. PUNSALANG and
PETER T. TABANG, Petitioners, v. HON. EUTROPIO MIGRINO, as Presiding Judge, Regional
Trial Court, NCJR, Branch 151, Pasig, Metro Manila and TROADIO TECSON, Respondents.

The Solicitor General, for Petitioners.

Pacifico B. Advincula for Private Respondent.

DECISION

CORTES, J.:

This case puts in issue the authority of the Presidential Commission on Good Government (PCGG),
through the New Armed Forces of the Philippines Anti-Graft Board (hereinafter referred to as the
"Board"), to investigate and cause the prosecution of petitioner, a retired military officer, for violation
of Republic Acts Nos. 3019 and 1379.

Assailed by the Republic in this petition for certiorari, prohibition and/or mandamus with prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining order are the orders of
respondent judge in Civil Case No. 57092 Branch 151 of the Regional Trial Court of Pasig, Metro
Manila: (1) dated June 23, 1989, denying petitioners’ Motion to Dismiss and Opposition, and (2) dated
June 26, 1989, granting private respondent’s application for the issuance of a writ of preliminary
injunction. Thus, the petition seeks the annulment of the two orders, the issuance of an injunction to
enjoin respondent judge from proceeding with Civil Case No. 57092 and, finally, the dismissal of the
case before the trial court.

The controversy traces its roots to the order of then PCGG Chairman Jovito R. Salonga, dated May
13, 1986, which created the New Armed Forces of the Philippines Anti-Graft Board. The Board was
created to "investigate the unexplained wealth and corrupt practices of AFP personnel, both retired
and in active service." The order further stated that" [t]he Board shall be primarily charged with the
task of investigating cases of alleged violations of the Anti-Graft and Corrupt Practices Act (Republic
Act No. 3019, as amended) and shall make the necessary recommendations to appropriate
government agencies and instrumentalities with respect to the action to be taken thereon based on its
findings."cralaw virtua1aw library

Acting on information received by the Board, which indicated the acquisition of wealth beyond his
lawful income, private respondent Lt. Col. Troadio Tecson (ret.) was required by the Board to submit
his explanation/comment together with his supporting evidence by October 31, 1987 [Annex "B",
Petition]. Private respondent requested, and was granted, several postponements, but was unable to
produce his supporting evidence because they were allegedly in the custody of his bookkeeper who
had gone abroad.

Just the same, the Board proceeded with its investigation and submitted its resolution, dated June 30,
1988, recommending that private respondent be prosecuted and tried for violation of Rep. Act No.
3019, as amended, and Rep. Act No. 1379, as amended.chanrobles lawlibrary : rednad
The case was set for preliminary investigation by the PCGG. Private respondent moved to dismiss
the case on the following grounds: (1) that the PCGG has no jurisdiction over his person; (2) that the
action against him under Rep. Act No. 1379 has already prescribed; (3) that E.O. No. 14, insofar as it
suspended the provisions of Rep. Act No. 1379 on prescription of actions, was inapplicable to his
case; and (4) that having retired from the AFP on May 9, 1984, he was now beyond the reach of Rep.
Act No. 3019. The Board opposed the motion to dismiss.

In a resolution dated February 8, 1989, the PCGG denied the motion to dismiss for lack of merit.
Private respondent moved for reconsideration but this was denied by the PCGG in a resolution dated
March 8, 1989. Private respondent was directed to submit his counter-affidavit and other
controverting evidence on March 20, 1989 at 2:00 p.m.

On March 13, 1989, private respondent filed a petition for prohibition with preliminary injunction with
the Regional Trial Court in Pasig, Metro Manila. The case was docketed as Case No. 57092 and
raffled to Branch 151, respondent judge’s court. Petitioner filed a motion to dismiss and opposed the
application for the issuance of a writ of preliminary injunction on the principal ground that the Regional
Trial Court had no jurisdiction over the Board, citing the case of PCGG v. Peña, G.R. No. 77663, April
12, 1988, 159 SCRA 556. Private respondent opposed the motion to dismiss. Petitioner replied to the
opposition.

On June 23, 1989, respondent judge denied petitioner’s motion to dismiss. On June 26, 1989,
respondent judge granted the application for the issuance of a writ of preliminary injunction, enjoining
petitioners from investigating or prosecuting private respondent under Rep. Acts Nos. 3019 and 1379
upon the filing of a bond in the amount of Twenty Thousand Pesos (P20,000.00).

Hence, the instant petition.

On August 29, 1989, the Court issued a restraining order enjoining respondent judge from enforcing
his orders dated June 23, 1989 and June 26, 1989 and from proceeding with Civil Case No. 57092.

Private respondent filed his comment, to which petitioners filed a reply. A rejoinder to the reply was
filed by private Respondent. The Court gave due course to the petition and the parties filed their
memoranda. Thereafter, the case was deemed submitted.

The issues raised in the petition are as follows:chanrob1es virtual 1aw library

I.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION OR ACTED

WITHOUT OR IN EXCESS OF JURISDICTION IN ASSUMING JURISDICTION OVER AND
INTERFERING WITH THE ORDERS AND FUNCTIONS OF THE PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT.

II.

WHETHER, OR NOT RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION OR ACTED

WITHOUT OR IN EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER DATED JUNE
26, 1989 ENJOINING PETITIONERS FROM INVESTIGATING AND PROSECUTING PRIVATE
RESPONDENT FOR VIOLATION OF REPUBLIC ACT NO. 3019, OTHERWISE KNOWN AS ANTI-
GRAFT AND CORRUPT PRACTICES ACT AND REPUBLIC ACT NO. 1379, OTHERWISE KNOWN
AS AN ACT FOR THE FORFEITURE OF UNLAWFULLY ACQUIRED PROPERTY [Rollo, p. 19].

As to the first issue, petitioner contends that following the ruling of the Court in PCGG v. Peña the
Board, being a creation and/or extension of the PCGG, is beyond the jurisdiction of the Regional Trial
Court. On the second issue, petitioner strongly argues that the private respondent’s case falls within
the jurisdiction of the PCGG.

The pivotal issue is the second one. On this point, private respondent’s position is as
follows:chanrob1es virtual 1aw library

1. . . . he is not one of the subordinates contemplated in Executive Orders 1 , 2 , 14 and 14-A as the
alleged illegal acts being imputed to him, that of alleged amassing wealth beyond his legal means
while Finance Officer of the Philippine Constabulary, are acts of his own alone, not connected with his
being a crony, business associate, etc. or subordinate as the petition does not allege so. Hence the
PCGG has no jurisdiction to investigate him.

If indeed private respondent amassed wealth beyond his legal means, the procedure laid down by
Rep. Act 1379 as already pointed out before be applied. And since, he has been separated from the
government more than four years ago, the action against him under Republic Act 1379 has already
prescribed.

2. . . . no action can be filed anymore against him now under Republic Act 1379 for recovery of
unexplained wealth for the reason that he has retired more than four years ago.

3. . . . The order creating the AFP Anti-Graft Board (Annex "A", Petition) is null and void. Nowhere in
Executive Orders 1, 2, 14 and 14-A is there any authority given to the commission, its chairman and
members, to create Boards or bodies to be invested with powers similar to the powers invested with
the commission .. [Comment, pp. 6-7; Rollo, pp. 117-118].

1. The most important question to be resolved in this case is whether or not private respondent may
be investigated and caused to be prosecuted by the Board, an agency of the PCGG, for violation of
Rep. Acts Nos. 3019 and 1379. According to petitioners, the PCGG has the power to investigate and
cause the prosecution of private respondent because he is a "subordinate" of former President
Marcos. They cite the PCGG’s jurisdiction over —

(a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his
immediate family, relatives, subordinates and close associates, whether located in the Philippines or
abroad, including the takeover or sequestration of all business enterprises and entities owned or
controlled by them, during his administration, directly or through nominees, by taking undue
advantage of their public office and/or using their powers, authority, influence, connections or
relationship. [E.O. No. 1, sec. 2.].

Undoubtedly, the alleged unlawful accumulation of wealth was done during the administration of Pres.
Marcos. However, what has to be inquired into is whether or not private respondent acted as a
"subordinate" of Pres. Marcos within the contemplation of E.O. No. 1, the law creating the PCGG,
when he allegedly unlawfully acquired the properties.

A close reading of E. O. No. 1 and related executive orders will readily show what is contemplated
within the term "subordinate."cralaw virtua1aw library

The Whereas Clauses of E. O. No. 1 express the urgent need to recover the ill-gotten wealth
amassed by former President Ferdinand E. Marcos, his immediate family, relatives, and close
associates both here and abroad.

E.O. No. 2 freezes "all assets and properties in the Philippines in which former President Marcos
and/or his wife, Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business
associates, dummies, agents, or nominees have any interest or participation."cralaw virtua1aw library

Applying the rule in statutory construction known as ejusdem generis, that is —

[W]here general words follow an enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in their widest extent, but are to be held
as applying only to persons or things of the same kind or class as those specifically mentioned
[Smith, Bell & Co., Ltd. v. Register of Deeds of Davao, 96 Phil. 53, 58 (1954), citing Black on
Interpretation of Laws, 2nd Ed., 203].

the term "subordinate" as used in E.O. Nos. 1 and 2 would refer to one who enjoys a close
association or relation with former Pres. Marcos and/or his wife, similar to the immediate family
member, relative, and close associate in E.O. No. 1 and the close relative, business associate,
dummy, agent, or nominee in E.O. No. 2.

Thus, as stated by the Court in Bataan Shipyard & Engineering Co., Inc. v. PCGG, G.R. No. 75885,
May 27, 1987, 150 SCRA 181, 205-206.

The situations envisaged and sought to be governed [by Proclamation No. 3 and E.O. Nos. 1, 2 and
14] are self-evident, these being:chanrob1es virtual 1aw library

1) that" (i)ll gotten properties (were) amassed by the leaders and supporters of the previous regime" ;

a) more particularly, that" (i)ll-gotten wealth (was) accumulated by former President Ferdinand E.
Marcos, his immediate family, relatives, subordinates, and close associates, . . . located in the
Philippines or abroad, xx (and) business enterprises and entities (came to be) owned or controlled by
them, during . . . (the Marcos) administration, directly or through nominees, by taking undue
advantage of their public office and/or using their powers, authority, influence, connections or
relationship;"

b) otherwise stated, that "there are assets and properties pertaining to former President Ferdinand E.
Marcos, and/or his wife Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business
associates, dummies, agents or nominees which had been or were acquired by them directly or
indirectly, through or as a result of the improper or illegal use of funds or properties owned by the
Government of the Philippines or any of its branches, instrumentalities, enterprises, banks or financial
institutions, or by taking undue advantage of their office, authority, influence, connections or
relationship, resulting in their unjust enrichment and causing grave damage and prejudice to the
Filipino people and the Republic of the Philippines" ;

c) that "said assets and properties are in the form of bank accounts, deposits, trust accounts, shares
of stocks, buildings, shopping centers, condominiums, mansions, residences, estates, and other
kinds of real and personal properties in the Philippines and in various countries of the world;" and.

2) that certain "business enterprises and properties (were) taken over by the government of the
Marcos Administration or by entities or persons close to former President Marcos." [Footnotes
deleted].
It does not suffice, as in this case, that the respondent is or was a government official or employee
during the administration of former Pres. Marcos. There must be a prima facie showing that the
respondent unlawfully accumulated wealth by virtue of his close association or relation with former
Pres. Marcos and/or his wife. This is so because otherwise the respondent’s case will fall under
existing general laws and procedures on the matter. Rep. Act No. 3019, the Anti-Graft and Corrupt
Practices Act, penalizes the corrupt practices of any public officer. Under Rep. Act No. 1379 (An Act
Declaring Forfeited in Favor of the State Any Property Found to Have Been Unlawfully Acquired By
Any Public Officer or Employee and Providing for the Procedure Therefor), whenever any public
officer or employee has acquired during his incumbency an amount of property which is manifestly
out of proportion to his salary as such public officer or employee and to his other lawful income and
the income from legitimately acquired property, said property shall be presumed prima facie to have
been unlawfully acquired [Sec. 2]. The Solicitor General shall file the petition and prosecute the case
in behalf of the Republic, after preliminary investigation by the provincial or city prosecutor [Ibid].

Moreover, the record shows that private respondent was being investigated for unlawfully acquired
wealth under Rep. Acts Nos. 3019 and 1379, and not under E.O. Nos. 1, 2, 14 and 14-A.

Since private respondent was being investigated by the PCGG through the AFP Anti-Graft Board it
would have been presumed that this was under Rep. Acts Nos. 3019 and 1379 in relation to E.O.
Nos. 1, 2, 14 and 14-A. But the record itself belies this presumption:chanrob1es virtual 1aw library

(a) The letter of the chairman of the AFP Anti-Graft Board to private respondent, dated October 16,
1987, states: "This letter is in connection with the alleged information received by the AFP Anti-Graft
Board indicating your acquisition of wealth beyond legal means of income in violation of Rep. Act No.
3019 known as the Anti-Graft and Corrupt Practices Act." [Rollo, p. 39].

(b) The Resolution dated June 30, 1988 of the Board categorically states:chanrob1es virtual 1aw
library

I. PRELIMINARY STATEMENT:chanrob1es virtual 1aw library

This refers to the case against Col Troadio B. Tecson PC (Ret) for alleged unexplained wealth
pursuant to R.A. 3019, as amended, otherwise known as Anti-Graft and Corrupt Practices Act and
R.A. 1379, as amended, otherwise known as the "Act for Forfeiture of Unlawfully Acquired Property."
[Rollo, p. 43].

The resolution alleges that private respondent unlawfully accumulated wealth by taking advantage of
his office as Finance Officer of the Philippine Constabulary. No attempt is made in the Board’s
resolution to link him or his accumulation of wealth to former Pres. Marcos and/or his wife.

(c) The letter of the Board chairman to the chairman of the PCGG, dated July 28, 1988, is
clear:chanrob1es virtual 1aw library

Respectfully transmitted herewith for the prosecution before the Sandiganbayan is the case folder of
COLONEL TROADIO TECSON (Ret) who after preliminary investigation of the case by the Board,
found a prima facie evidence against subject officer for violating Section 8, R.A. 3019, as amended by
BP 195, otherwise known as the Anti-Graft and Corrupt Practices Act and R.A. 1379, otherwise
known as an Act for the Forfeiture of Unlawfully Acquired Property." [Rollo, p. 46].

Moreover, from the allegations of petitioner in its memorandum, it would appear that private
respondent accumulated his wealth for his own account. Petitioner quoted the letter of Ignacio
Datahan, a retired PC sergeant, to General Fidel Ramos, the material portion of which
reads:chanrob1es virtual 1aw library

. . . After an official in the military unit received an Allotment Advice the same signed a cash advance
voucher, let us say in the amount of P5,000.00. Without much ado, outright, Col. Tecson paid the
amount. The official concerned was also made to sign the receipt portion on the voucher the amount
of which was left blank. Before the voucher is passed for routine processing by Mrs. Leonor Cagas,
clerk of Col. Tecson and its facilitator, the maneuver began. The amount on the face of the cash
advance voucher is altered or superimposed. The original amount of P5,000.00 was now made say,
P95,000.00. So it was actually the amount of P95,000.00 that appeared on the records. The
difference of P90,000.00 went to the syndicate.

. . . Boy Tanyag, bookkeeper in Col. Tecson’s office took care of the work.

. . . In the liquidation of the altered cash advance amount, names of persons found in the Metropolitan
Manila Telephone Directory with fictitious addresses appeared as recipients or payees. Leonor and
Boy got their shares on commission basis of the looted amount while the greater part went to Col.
Tecson. [Rollo, pp. 184-185.].

Clearly, this alleged unlawful accumulation of wealth is not that contemplated in E.O. Nos. 1, 2, 14
and 14-A.

2. It will not do to cite the order of the PCGG Chairman, dated May 13, 1986, creating the Board and
authorizing it to investigate the unexplained wealth and corrupt practices of AFP personnel, both
retired and in active service, to support the contention that PCGG has jurisdiction over the case of
private Respondent. The PCGG cannot do more than what it was empowered to do. Its powers are
limited. Its task is limited to the recovery of the ill-gotten wealth of the Marcoses, their relatives and
cronies. The PCGG cannot, through an order of its chairman, grant itself additional powers — powers
not contemplated in its enabling law.

3. Petitioner assails the trial court’s cognizance of the petition filed by private Respondent.
Particularly, petitioner argues that the trial court cannot acquire jurisdiction over the PCGG. This
matter has already been settled in Peña, supra, where the Court ruled that those who wish to
question or challenge the PCGG’s acts or orders must seek recourse in the Sandiganbayan, which is
vested with exclusive and original jurisdiction. The Sandiganbayan’s decisions and final orders are in
turn subject to review on certiorari exclusively by this Court. [Ibid, at pp. 564-565].

The ruling in Peña was applied in PCGG v. Aquino, G.R. No. 77816, June 30, 1988, 163 SCRA 363,
Soriano III v. Yuson, G.R. No. 74910 (and five other cases), August 10, 1988, 164 SCRA 226 and
Olaguer v. RTC, NCJR, Br. 48, G.R. No. 81385, February 21, 1989, 170 SCRA 478, among others, to
enjoin the regional trial courts from interfering with the actions of the PCGG.

Respondent judge clearly acted without or in excess of his jurisdiction when he took cognizance of
Civil Case No. 57092 and issued the writ of preliminary injunction against the PCGG.

4. Thus, we are confronted with a situation wherein the PCGG acted in excess of its jurisdiction and,
hence, may be enjoined from doing so, but the court that issued the injunction against the PCGG has
not been vested by law with jurisdiction over it and, thus, the injunction issued was null and void.

The nullification of the assailed order of respondent judge issuing the writ of preliminary injunction is
therefore in order. Likewise, respondent judge must be enjoined from proceeding with Civil Case No.
57092.
But in view of the patent lack of authority of the PCGG to investigate and cause the prosecution of
private respondent for violation of Rep. Acts Nos. 3019 and 1379, the PCGG must also be enjoined
from proceeding with the case, without prejudice to any action that may be taken by the proper
prosecutory agency. The rule of law mandates that an agency of government be allowed to exercise
only the powers granted it.

5. The pronouncements made above should not be taken to mean that the PCGG’s creation of the
AFP Anti-Graft Board is a nullity and that the PCGG has no authority to investigate and cause the
prosecution of members and former members of the Armed Forces of the Philippines for violations of
Rep. Acts Nos. 3019 and 1379. The PCGG may investigate and cause the prosecution of active and
retired members of the AFP for violations of Rep. Acts Nos. 3019 and 1379 only in relation to E.O.
Nos. 1, 2, 14 and 14-A, i.e., insofar as they involve the recovery of the ill-gotten wealth of former
Pres. Marcos and his family and "cronies." But the PCGG would not have jurisdiction over an ordinary
case falling under Rep. Acts Nos. 3019 and 1379, as in the case at bar. E.O. Nos. 1, 2, 14 and 14-A
did not envision the PCGG as the investigator and prosecutor of all unlawful accumulations of wealth.
The PCGG was created for a specific and limited purpose, as we have explained earlier, and
necessarily its powers must be construed with this in mind.

6. n his pleadings, private respondent contends that he may no longer be prosecuted because of
prescription. He relies on section 2 of Rep. Act No. 1379 which provides that" [t]he right to file such
petition [for forfeiture of unlawfully acquired wealth] shall prescribe within four years from the date of
resignation, dismissal or separation or expiration of the term of the officer or employee concerned."
He retired on May 9, 1984, or more than six (6) years ago. However, it must be pointed out that
section 2 of Rep. Act No. 1379 should be deemed amended or repealed by Article XI, section 15 of
the 1987 Constitution which provides that" [t]he right of the State to recover properties unlawfully
acquired by public officials or employees, from them or from their nominees or transferees, shall not
be barred by prescription, laches, or estoppel." Considering that sec. 2 of Rep. Act No. 1379 was
deemed amended or repealed before the prescriptive period provided therein had lapsed insofar as
private respondent is concerned, we cannot say that he had already acquired a vested right that may
not be prejudiced by a subsequent enactment.

Moreover, to bar the Government from recovering ill-gotten wealth would result in the validation or
legitimization of the unlawful acquisition, a consequence at variance with the clear intent of Rep. Act
No. 1379, which provides:chanrobles virtual lawlibrary

SEC. 11. Laws on prescription. — The laws concerning acquisitive prescription and limitation of
actions cannot be invoked by, nor shall they benefit the respondent, in respect to any property
unlawfully acquired by him.

Thus, we hold that the appropriate prosecutory agencies, i.e., the city or provincial prosecutor and the
Solicitor General under sec. 2 of Rep. Act No. 1379, may still investigate the case and file the petition
for the forfeiture of unlawfully acquired wealth against private respondent, now a private citizen. (On
the other hand, as regards respondents for violations of Rep. Acts Nos. 3019 and 1379 who are still
in the government service, the agency granted the power to investigate and prosecute them is the
Office of the Ombudsman [Rep. Act No. 6770]). Under Presidential Decree No. 1606, as amended,
and Batas Pambansa Blg. 195 violations of Rep. Acts Nos. 3019 and 1379 shall be tried by the
Sandiganbayan.

7. The Court hastens to add that this decision is without prejudice to the prosecution of private
respondent under the pertinent provisions of the Revised Penal Code and other related penal laws.

WHEREFORE, the order of respondent judge dated June 26, 1989 in Civil Case No. 57092 is
NULLIFIED and SET ASIDE. Respondent judge is ORDERED to dismiss Civil Case No. 57092. The
temporary restraining order issued by the Court on August 29, 1989 is MADE PERMANENT. The
PCGG is ENJOINED from proceeding with the investigation and prosecution of private respondent in
I.S. No. 37, without prejudice to his investigation and prosecution by the appropriate prosecutory
agency.

SO ORDERED.
G.R. No. L-47757-61 January 28, 1980

THE PEOPLE OF THE PHILIPPINES, ABUNDIO R. ELLO, As 4th Assistant of Provincial Bohol
VICENTE DE LA SERNA. JR., as complainant all private prosecutor, petitioners,
vs.
HON. VICENTE B. ECHAVES, JR., as Judge of the Court of First Instance of Bohol Branch II,
ANO DACULLO, GERONIMO OROYAN, MARIO APARICI, RUPERTO CAJES and MODESTO S
SUELLO, respondents.

AQUINO, J.:p

The legal issue in this case is whether Presidential Decree No. 772, which penalizes squatting and
similar acts, applies to agricultural lands. The decree (which took effect on August 20, 1975) provides:

SECTION 1. Any person who, with the use of force, intimidation or threat, or taking
advantage of the absence or tolerance of the landowner, succeeds in occupying or
possessing the property of the latter against his will for residential, commercial or any
other purposes, shall be punished by an imprisonment ranging from six months to one
year or a fine of not less than one thousand nor more than five thousand pesos at the
discretion of the court, with subsidiary imprisonment in case of insolvency. (2nd
paragraph is omitted.)

The record shows that on October 25, 1977 Fiscal Abundio R. Ello filed with the lower court separate
informations against sixteen persons charging them with squatting as penalized by Presidential
Decree No. 772. The information against Mario Aparici which is similar to the other fifteen
informations, reads:

That sometime in the year 1974 continuously up to the present at barangay Magsaysay,
municipality of Talibon, province of Bohol, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused, with stealth and strategy, enter into,
occupy and cultivate a portion of a grazing land physically occupied, possessed and
claimed by Atty. Vicente de la Serna, Jr. as successor to the pasture applicant Celestino
de la Serna of Pasture Lease Application No. 8919, accused's entrance into the area
has been and is still against the win of the offended party; did then and there willfully,
unlawfully, and feloniously squat and cultivate a portion of the said grazing land; said
cultivating has rendered a nuisance to and has deprived the pasture applicant from the
full use thereof for which the land applied for has been intended, that is preventing
applicant's cattle from grazing the whole area, thereby causing damage and prejudice to
the said applicant-possessor-occupant, Atty. Vicente de la Serna, Jr. (sic)

Five of the informations, wherein Ano Dacullo, Geronimo Oroyan, Mario Aparici, Ruperto Cajes and
Modesto Suello were the accused, were raffled to Judge Vicente B. Echaves, Jr. of Branch II
(Criminal Cases Nos. 1824, 1828, 1832, 1833 and 1839, respectively).

Before the accused could be arraigned, Judge Echaves motu proprio issued an omnibus order dated
December 9, 1977 dismissing the five informations on the grounds (1) that it was alleged that the
accused entered the land through "stealth and strategy", whereas under the decree the entry should
be effected "with the use of force, intimidation or threat, or taking advantage of the absence or
tolerance of the landowner", and (2) that under the rule of ejusdem generis the decree does not apply
to the cultivation of a grazing land.
Because of that order, the fiscal amended the informations by using in lieu of "stealth and strategy"
the expression "with threat, and taking advantage of the absence of the ranchowner and/or tolerance
of the said ranchowner". The fiscal asked that the dismissal order be reconsidered and that the
amended informations be admitted.

The lower court denied the motion. It insisted that the phrase "and for other purposes" in the decree
does not include agricultural purposes because its preamble does not mention the Secretary of
Agriculture and makes reference to the affluent class.

From the order of dismissal, the fiscal appealed to this Court under Republic Act No. 5440. The
appeal is devoid of merit.

We hold that the lower court correctly ruled that the decree does not apply to pasture lands because
its preamble shows that it was intended to apply to squatting in urban communities or more
particularly to illegal constructions in squatter areas made by well-to-do individuals. The squating
complained of involves pasture lands in rural areas.

The preamble of the decree is quoted below:

WHEREAS, it came to my knowledge that despite the issuance of Letter of Instruction

No. 19 dated October 2, 1972, directing the Secretaries of National Defense, Public
Work. 9 and communications, Social Welfare and the Director of Public Works, the
PHHC General Manager, the Presidential Assistant on Housing and Rehabilitation
Agency, Governors, City and Municipal Mayors, and City and District Engineers, "to
remove an illegal constructions including buildings on and along esteros and river
banks, those along railroad tracks and those built without permits on public and private
property." squatting is still a major problem in urban communities all over the country;

WHEREAS, many persons or entities found to have been unlawfully occupying public
and private lands belong to the affluent class;

WHEREAS, there is a need to further intensify the government's drive against this illegal
and nefarious practice.

It should be stressed that Letter of Instruction No. 19 refers to illegal constructions on public and
private property. It is complemented by Letter of Instruction No. 19-A which provides for the relocation
of squatters in the interest of public health, safety and peace and order.

On the other hand, it should be noted that squatting on public agricultural lands, like the grazing lands
involved in this case, is punished by Republic Act No. 947 which makes it unlawful for any person,
corporation or association to forcibly enter or occupy public agricultural lands. That law provides:

SECTION 1. It shall be unlawful for any person corporation or association to enter or

occupy, through force, intimidation, threat, strategy or stealth, any public agriculture
land including such public lands as are granted to private individuals under the provision
of the Public Land Act or any other laws providing for the of public agriculture lands in
the Philippines and are duly covered by the corresponding applications for the
notwithstanding standing the fact that title thereto still remains in the Government or for
any person, natural or judicial to investigate induce or force another to commit such
acts.
Violations of the law are punished by a fine of not exceeding one thousand or imprisonment for not
more than one year, or both such fine and imprisonment in the discretion of the court, with subsidiary
imprisonment in case of insolvency. (See People vs. Lapasaran 100 Phil. 40.)

The rule of ejusdem generis (of the same kind or species) invoked by the trial court does not apply to
this case. Here, the intent of the decree is unmistakable. It is intended to apply only to urban
communities, particularly to illegal constructions. The rule of ejusdem generis is merely a tool of
statutory construction which is resorted to when the legislative intent is uncertain (Genato
Commercial Corp. vs. Court of Tax Appeals, 104 Phil. 615,618; 28 C.J.S. 1049-50).

WHEREFORE, the trial court's order of dismissal is affirmed. No costs.

SO ORDERED.
G.R. No. 180235

ALTA VISTA GOLF AND COUNTRY CLUB, Petitioner,

vs.
THE CITY OF CEBU, HON. MAYOR TOMAS R. OSMEÑA, in his capacity as Mayor of Cebu,
and TERESITA C. CAMARILLO, in her capacity as the City Treasurer, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Review on Certiorari of the Resolution1 dated March 14, 2007 and
the Order2 dated October 3, 2007 of the Regional Trial Court (RTC), Cebu City, Branch 9 in Civil
Case No. CEB-31988, dismissing the Petition for Injunction, Prohibition, Mandamus, Declaration of
Nullity of Closure Order, Declaration of Nullity of Assessment, and Declaration of Nullity of Section 42
of Cebu City Tax: Ordinance, with Prayer for Temporary Restraining Order and Writ of Preliminary
Injunction3 filed by petitioner Alta Vista Golf and Country Club against respondents City of Cebu
(Cebu City), then Cebu City Mayor Tomas R. Osmeña (Osmeña), and then Cebu City Treasurer
Teresita Camarillo (Camarillo).

Petitioner is a non-stock and non-profit corporation operating a golf course in Cebu City.

On June 21, 1993, the Sangguniang Panlungsod of Cebu City enacted City Tax: Ordinance No.
LXIX, otherwise known as the "Revised Omnibus Tax: Ordinance of the City of Cebu" (Revised
Omnibus Tax: Ordinance). Section 42 of the said tax ordinance on amusement tax was amended by
City Tax Ordinance Nos. LXXXII4 and LXXXIV5 (which were enacted by the Sangguniang
Panlungsod of Cebu City on December 2, 1996 and April 20, 1998, respectively6) to read as follows:

Section 42. Rate of Tax. - There shall be paid to the Office of the City Treasurer by the proprietors,
lessees or operators of theaters, cinemas, concert halls, circuses and other similar places of
entertainment, an amusement tax at the rate of thirty percent (30%), golf courses and polo grounds at
the rate of twenty percent (20% ), of their gross receipts on entrance, playing green, and/or admission
fees; PROVIDED, HOWEVER, That in case of movie premieres or gala shows for the benefit of a
charitable institution/foundation or any government institution where higher admission fees are
charged, the aforementioned rate of thirty percent (30%) shall be levied against the gross receipts
based on the regular admission fees, subject to the approval of the Sangguniang Panlungsod;
PROVIDED FURTHER, That in case payment of the amusement tax is made promptly on or before
the date hereinbelow prescribed, a rebate of five percent (5%) on the aforementioned gross receipts
shall be given to the proprietors, lessees or operators of theaters; PROVIDED FURTHERMORE, that
as an incentive to theater operators who own the real property and/or building where the theater is
located, an additional one percent (1 %) rebate shall be given to said operator/real property owner
concerned for as long as their theater/movie houses are then (10) years old or older or the theater or
movie house is located at the city's redevelopment area bounded on the north by Gen. Maxilom
Street up to the port area; on the south by V. Rama Avenue up to San Nicolas area; and on the west
by B. Rodriguez St. and General Maxilom Avenue; PROVIDED FINALLY, that the proceeds of this
additional one percent (1 %) rebate shall be used by the building/property owner-theater operator to
modernize their theater facilities. (Emphases supplied.)

In an Assessment Sheet7 dated August 6, 1998, prepared by Cebu City Assessor Sandra I. Po,
petitioner was originally assessed deficiency business taxes, fees, and other charges for the year
1998, in the total amount of P3,820,095.68, which included amusement tax on its golf course
amounting to P2,612,961.24 based on gross receipts of P13,064,806.20.8
Through the succeeding years, respondent Cebu City repeatedly attempted to collect from petitioner
its deficiency business taxes, fees, and charges for 1998, a substantial portion of which consisted of
the amusement tax on the golf course. Petitioner steadfastly refused to pay the amusement tax
arguing that the imposition of said tax by Section 42 of the Revised Omnibus Tax Ordinance, as
amended, was irregular, improper, and illegal. Petitioner reasoned that under the Local Government
Code, amusement tax can only be imposed on operators of theaters, cinemas, concert halls, or
places where one seeks to entertain himself by seeing or viewing a show or performance. Petitioner
further cited the ruling in Philippine Basketball Association (PBA) v. Court of Appeals9 that under
Presidential Decree No. 231, otherwise known as the Lo.cal Tax Code of 1973, the province could
only impose amusement tax on admission from the proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses, and other places of amusement, but not professional
basketball games. Professional basketball games did not fall under the same category as theaters,
cinematographs, concert halls, and circuses as the latter basically belong to artistic forms of
entertainment while the former catered to sports and gaming.

Through a letter dated October 11, 2005, respondent Camarillo sought to collect once more from
petitioner deficiency business taxes, fees, and charges for the year 1998, totaling P2,981,441.52,
computed as follows:

Restaurant - P4,021,830.65   P 40,950.00

Permit Fee   2,000.00
Liquor-Pl,940,283.80   20,160.00
Permit Fee   2,000.00
Commission/Other Income   14,950.00
P 1,262,764.28    
Permit Fee   1,874.00
Retail Cigarettes - P42,076. 11 - Permit   84.15
Non-Securing of Permit   979.33
Sub-Total   P 82,997.98
Less: Payment based on computer assessment   74,858.61
Short payment   P 12,723.18
25% surcharge   3,180.80
72% interest   11,450.00
Penalty for understatement   500.00
Amount Due   P 27 ,854.85
Add: Amusement Tax on golf course P 1,373,761.24  
25% surcharge (P6,868,806.20 x 20%) 343,440.31  
72% Interest 1,236,385.12 2,953,586.67

GRAND TOTAL   P 2,981,441.5210

(Emphasis supplied.)

Petitioner, through counsel, wrote respondent Camarillo a letter11 dated October 17, 2005 still
disputing the amusement tax assessment on its golf course for 1998 for being illegal. Petitioner, in a
subsequent letter dated November 30, 2005, proposed that:

While the question of the legality of the amusement tax on golf courses is still unresolved, may we
propose that Alta Vista Golf and Country Club settle first the other assessments contained in your
Assessment Sheet issued on October 11, 2005.

At this early stage, we also request that pending resolution of the legality of the amusement tax
imposition on golf courses in [the Revised Omnibus Tax Ordinance, as amended], Alta Vista Golf and
Country Club be issued the required Mayor's and/or Business Permit.12

Respondent Camarillo treated the letter dated October 17, 2005 of petitioner as a Protest of
Assessment and rendered on December 5, 2005 her ruling denying said Protest on the following
grounds: (a) a more thorough and comprehensive reading of the PBA case would reveal that the
Court actually ruled therein that PBA was liable to pay amusement tax, but to the national
government, not the local government; (b) section 42 of the Revised Omnibus Tax Ordinance, as
amended, enjoyed the presumption of constitutionality and petitioner failed to avail itself of the
remedy under Section 187 of the Local Government Code to challenge the legality or validity of
Section 42 of the Revised Omnibus Tax Ordinance, as amended, by filing an appeal with the
Secretary of Justice within 30 days from effectivity of said ordinance; and ( c) the Office of the City
Attorney issued a letter dated July 9, 2004 affirming respondent Camarillo's position that petitioner
was liable to pay amusement tax on its golf course.13 Ultimately, respondent Camarillo held:

WHEREFORE, upon consideration of the legal grounds as above-mentioned, we reiterate our

previous stand on the validity of the ASSESSMENT SHEET pertaining to the Tax Deficiencies for CY
1998 and this ruling serve as the FINAL DEMAND for immediate settlement and payment of your
amusement tax liabilities and/or delinquencies otherwise we will constrained (sic) the non-issuance of
a Mayor's Business Permit for nonpayment of the said deficiency on amusement tax and/or other tax
liabilities as well as to file the appropriate filing of administrative and judicial remedies for the
collection of the said tax liability and the letter treated as a Protest of Assessment that was duly
submitted before this office is hereby DENIED.14

Shortly after, on January 12, 2006, petitioner was served with a Closure Order15 dated December 28,
2005 issued by respondent City Mayor Osmeña. According to the Closure Order, petitioner
committed blatant violations of the laws and Cebu City Ordinances, to wit:

1. Operating a business without a business permit for five (5) years, from year 2001-
2005, in relation to Chapters I and II and the penalty clauses under Sections 4, 6, 8, 66 (f) and
114 of the City Tax Ordinance No. 69, otherwise known as the REVISED CITY TAX
ORDINANCE OF THE CITY OF CEBU, as amended By C.O. 75;

2. Nonpayment of deficiency on Business Taxes and Fees amounting to Seventeen

Thousand Four Hundred Ninety-Nine Pesos and Sixty-Four Centavos (Php17,499.64), as
adjusted, despite repeated demands in violation [of] Sections 4 and 8 of City Tax Ordinance
No. 69, as amended;

3. Nonpayment of deficiency on Amusement Tax and the penalties relative therewith

totaling Two Million Nine Hundred Fifty-Three Thousand Five Hundred Eighty-Six Pesos
and Eighty-Six Centavos (Php2,953,586.86) in violation of Sections 4 and 8 in relation to
 Section 42 of City Tax Ordinance No. 69, as amended, business permit-violation of the Article
172, Revised Penal Code of the Philippines. (Emphases supplied.)

The Closure Order established respondent Mayor Osmeña's authority for issuance of the same and
contained the following directive:

As the chief executive of the City, the Mayor has the power and duty to: Enforce all laws and
ordinances relative to the governance of the city x x x and, in addition to the foregoing, shall x x x
Issue such executive orders for the faithful and appropriate enforcement and execution of laws and
ordinances x x x.1âwphi1 These are undeniable in the LOCAL GOVERNMENT CODE, Section 455,
par. (2) and par. (2)(iii).

Not only that, these powers can be exercised under the general welfare clause of the Code,
particularly Section 16 thereof, where it is irrefutable that "every government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental of its efficient and effective governance, and those which are essential to
the promotion of the general welfare."

This CLOSURE ORDER precisely satisfies these legal precedents. Hence now, in view whereof, your
business establishment is hereby declared closed in direct contravention of the above-specified laws
and city ordinances. Please cease and desist from further operating your business immediately upon
receipt of this order.

This closure order is without prejudice to the constitutional/statutory right of the City to file criminal
cases against corporate officers, who act for and its behalf, for violations of Section 114 of the
REVISED CITY TAX ORDINANCE OF THE CITY OF CEBU and Section 516 of the LOCAL
GOVERNMENT CODE, with penalties of imprisonment and/or fine.

FOR STRICT AND IMMEDIATE COMPLIANCE.16

The foregoing developments prompted petitioner to file with the RTC on January 13, 2006 a Petition
for Injunction, Prohibition, Mandamus, Declaration of Nullity of Closure Order, Declaration of Nullity of
Assessment, and Declaration of Nullity of Section 42 of Cebu City Tax Ordinance, with Prayer for
Temporary Restraining Order and Writ of Preliminary Injunction, against respondents, which was
docketed as Civil Case No. CEB-31988.17 Petitioner eventually filed an Amended Petition on January
19, 2006.18 Petitioner argued that the Closure Order is unconstitutional as it had been summarily
issued in violation of its right to due process; a city mayor has no power under the Local Government
Code to deny the issuance of a business permit and order the closure of a business for nonpayment
of taxes; Section 42 of the Revised Omnibus Tax Ordinance, as amended, is null and void for
being ultra vires or beyond the taxing authority of respondent Cebu City, and consequently, the
assessment against petitioner for amusement tax for 1998 based on said Section 42 is illegal and
unconstitutional; and assuming arguendo that respondent Cebu City has the power to impose
amusement tax on petitioner, such tax for 1998 already prescribed and could no longer be enforced.

Respondents filed a Motion to Dismiss based on the grounds of (a) lack of jurisdiction of the RTC
over the subject matter; (b) non-exhaustion of administrative remedies; (c) noncompliance with
Section 187 of the Local Government Code, which provides the procedure and prescriptive periods
for challenging the validity of a local tax ordinance; (d) noncompliance with Section 252 of the Local
Government Code and Section 75 of Republic Act No. 3857, otherwise known as the Revised Charter
of the City of Cebu, requiring payment under protest of the tax assessed; and (e) failure to establish
the authority of Ma. Theresa Ozoa (Ozoa) to institute the case on behalf of petitioner.19
In its Opposition to the Motion to Dismiss, petitioner countered that the RTC, a court of general
jurisdiction, could take cognizance of its Petition in Civil Case No. CEB-31988, which not only
involved the issue of legality or illegality of a tax ordinance, but also sought the declaration of nullity of
the Closure Order and the issuance of writs of injunction and prohibition. Petitioner likewise asserted
that Section 195 of the Local Government Code on the protest of assessment does not require
payment under protest. Section 252 of the same Code invoked by respondents applies only to real
property taxes. In addition, petitioner maintained that its Petition in Civil Case No. CEB-31988 could
not be barred by prescription. There is nothing in the Local Government Code that could deprive the
courts of the power to determine the constitutionality or validity of a tax ordinance due to prescription.
It is the constitutional duty of the courts to pass upon the validity of a tax ordinance and such duty
cannot be limited or restricted. Petitioner further contended that there is no need for exhaustion of
administrative remedies given that the issues involved are purely legal; the notice of closure is
patently illegal for having been issued without due process; and there is an urgent need for judicial
intervention. Lastly, petitioner pointed out that there were sufficient allegations in the Petition that its
filing was duly authorized by petitioner. At any rate, petitioner already attached to its Opposition its
Board Resolution No. 104 authorizing Ozoa to file a case to nullify the Closure Order. Thus, petitioner
prayed for the denial of the Motion to Dismiss.20

Respondents, in their Rejoinder to Petitioner's Opposition to the Motion to Dismiss,21 asserted that the
Closure Order was just a necessary consequence of the nonpayment by petitioner of the amusement
tax assessed against it. The Revised Omnibus Tax Ordinance of respondent Cebu City directs that
no permit shall be issued to a business enterprise which made no proper payment of tax and,
correspondingly, no business enterprise may be allowed to operate or continue to operate without a
business permit. The fundamental issue in the case was still the nonpayment by petitioner of
amusement tax. Respondents relied on Reyes v. Court of Appeals,22 in which the Court categorically
ruled that the prescriptive periods fixed in Section 187 of the Local Government Code are mandatory
and prerequisites before seeking redress from a competent court. Section 42 of the Revised Omnibus
Tax Ordinance, as amended, was passed on April 20, 1998, so the institution by petitioner of Civil
Case No. CEB-31988 before the RTC on January 13, 2006 - without payment under protest of the
assessed amusement tax and filing of an appeal before the Secretary of Justice within 30 days from
the effectivity of the Ordinance - was long barred by prescription.

After filing by the parties of their respective Memorandum, the RTC issued an Order23 dated March
16, 2006 denying the prayer of petitioner for issuance of a Temporary Restraining Order (TRO). The
RTC found that when the business permit of petitioner expired and it was operating without a
business permit, it ceased to have a legal right to do business. The RTC affirmed respondent Mayor
Osmeña's authority to issue or grant business licenses and permits pursuant to the police power
inherent in his office; and such authority to issue or grant business licenses and permits necessarily
included the authority to suspend or revoke or even refuse the issuance of the said business licenses
and permits in case of violation of the conditions for the issuance of the same. The RTC went on to
hold that:

[Petitioner] was given opportunities to be heard when it filed a protest [of] the assessment which was
subsequently denied. To the mind of this court, this already constitutes the observance of due
process and that [petitioner] had already been given the opportunity to be heard. Due process and
opportunity to be heard does not necessarily mean winning the argument in one's favor but to be
given the fair chance to explain one's side or views with regards [to] the matter in issue, which in this
case is the legality of the tax assessment.

It is therefore clear that when this case was filed, [petitioner] had no more legal right in its favor for the
courts to protect. It would have been a different story altogether had [petitioner] paid the tax
assessment for the green fees even under protest and despite payment and [respondent] Mayor
refused the issuance of the business permit because all the requisites for the issuance of the said
permit are all complied with.24

On March 20, 2006, petitioner paid under protest to respondent Cebu City, through respondent
Camarillo, the assessed amusement tax, plus penalties, interest, and surcharges, in the total amount
of P2,750,249.17.25

Since the parties agreed that the issues raised in Civil Case No. CEB-31988 were all legal in nature,
the RTC already considered the case submitted for resolution after the parties filed their respective
Memorandum.26

On March 14, 2007, the R TC issued a Resolution granting the Motion to Dismiss of respondents.
Quoting from Reyes and Hagonoy Market Vendor Association v. Municipality of Hagonoy,
Bulacan,27 the RTC sustained the position of respondents that Section 187 of the Local Government
Code is mandatory. Thus, the RTC adjudged:

From the above cited cases, it can be gleaned that the period in the filing of the protests is important.
In other words, it is the considered opinion of this court [that] when a taxpayer questions the validity of
a tax ordinance passed by a local government legislative body, a different procedure directed in
Section 187 is to be followed. The reason for this could be because the tax ordinance is clearly
different from a law passed by Congress. The local government code has set several limitations on
the taxing power of the local government legislative bodies including the issue of what should be
taxed.

In this case, since the Petitioner failed to comply with the procedure outlined in Section 187 of the
Local Government Code and the fact that this case was filed way beyond the period to file a case in
court, then this court believes that the action must fail.

Because of the procedural infirmity in bringing about this case to the court, then the substantial issue
of the propriety of imposing amusement taxes on the green fees could no longer be determined.

WHEREFORE, in view of the aforegoing, this case is hereby DISMISSED.28

The RTC denied the Motion for Reconsideration of petitioner in an Order dated October 3, 2007.

Petitioner is presently before the Court on pure questions of law, viz.:

I. WHETHER OR NOT THE POWER OF JUDICIAL REVIEW OVER THE VALIDITY OF A LOCAL
TAX ORDINANCE HAS BEEN RESTRICTED BY SECTION 187 OF THE LOCAL GOVERNMENT
CODE.

II. WHETHER OR NOT THE CITY OF CEBU OR ANY LOCAL GOVERNMENT CAN VALIDLY
IMPOSE AMUSEMENT TAX TO THE ACT OF PLAYING GOLF.29

There is merit in the instant Petition.

The RTC judgment on pure questions of law may be directly appealed to this Court via a
petition for review on certiorari.
Even before the RTC, the parties already acknowledged that the case between them involved only
questions of law; hence, they no longer presented evidence and agreed to submit the case for
resolution upon submission of their respective memorandum.

It is incontestable that petitioner may directly appeal to this Court from the judgment of the RTC on
pure questions of law via its Petition for Review on Certiorari. Rule 41, Section 2(c) of the Rules of
Court provides that "[i]n all cases where only questions of law are raised or involved, the appeal shall
be to the Supreme Court by petition for review on certiorari in accordance with Rule 45." As the Court
declared in Bonifacio v. Regional Trial Court of Makati, Branch 14930:

The established policy of strict observance of the judicial hierarchy of courts, as a rule, requires that
recourse must first be made to the lowerranked court exercising concurrent jurisdiction with a higher
court. A regard for judicial hierarchy clearly indicates that petitions for the issuance of extraordinary
writs against first level courts should be filed in the RTC and those against the latter should be filed in
the Court of Appeals. The rule is not iron-clad, however, as it admits of certain exceptions.

Thus, a strict application of the rule is unnecessary when cases brought before the appellate courts
do not involve factual but purely legal questions. (Citations omitted.)

"A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being admitted[;]" and it may
be brought directly before this Court, the undisputed final arbiter of all questions of law.31

The present case is an exception to Section 187 of the Local Government Code and the
doctrine of exhaustion of administrative remedies.

Section 187 of the Local Government Code reads:

Sec. 187. Procedure ·for Approval and Effectivity of Tax Ordinances and Revenue Measures;
Mandatory Public Hearings. – The procedure for approval of local tax ordinances and revenue
measures shall be in accordance with the provisions of this Code: Provided, That public hearings
shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any
question on the constitutionality or legality of tax ordinances or revenue measures may be raised on
appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a
decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such
appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and
payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after
receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon
the appeal, the aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.

Indeed, the Court established in Reyes that the aforequoted provision is a significant procedural
requisite and, therefore, mandatory:

Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax
ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof. In
case the Secretary decides the appeal, a period also of 30 days is allowed for an aggrieved party to
go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party could already
proceed to seek relief in court. These three separate periods are clearly given for compliance as a
prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent
delays as well as enhance the orderly and speedy discharge of judicial functions. For this reason the
courts construe these provisions of statutes as mandatory.

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the
most effective instrument to raise needed revenues to finance and support the myriad activities of
local government units for the delivery of basic services essential to the promotion of the general
welfare and enhancement of peace, progress, and prosperity of the people. Consequently, any delay
in implementing tax measures would be to the detriment of the public. It is for this reason that protests
over tax ordinances are required to be done within certain time frames. In the instant case, it is our
view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by
Sec. 187 of R.A. 7160 is fatal to their cause.32 (Citations omitted.)

The Court further affirmed in Hagonoy that:

At this point, it is apropos to state that the timeframe fixed by law for parties to avail of their legal
remedies before competent courts is not a "mere technicality" that can be easily brushed aside. The
periods stated in Section 187 of the Local Government Code are mandatory. Ordinance No. 28 is a
revenue measure adopted by the municipality of Hagonoy to fix and collect public market stall rentals.
Being its lifeblood, collection of revenues by the government is of paramount importance. The funds
for the operation of its agencies and provision of basic services to its inhabitants are largely derived
from its revenues and collections. Thus, it is essential that the validity of revenue measures is not left
uncertain for a considerable length of time. Hence, the law provided a time limit for an aggrieved
party to assail the legality of revenue measures and tax ordinances.33 (Citations omitted.)

Nevertheless, in later cases, the Court recognized exceptional circumstances that justify
noncompliance by a taxpayer with Section 187 of the Local Government Code.

The Court ratiocinated in Ongsuco v. Malones,34 thus:

It is true that the general rule is that before a party is allowed to seek the intervention of the court, he
or she should have availed himself or herself of all the means of administrative processes afforded
him or her. Hence, if resort to a remedy within the administrative machinery can still be made by
giving the administrative officer concerned every opportunity to decide on a matter that comes within
his or her jurisdiction, then such remedy should be exhausted first before the court's judicial power
can be sought. The premature invocation of the intervention of the court is fatal to one's cause of
action. The doctrine of exhaustion of administrative remedies is based on practical and legal reasons.
The availment of administrative remedy entails lesser expenses and provides for a speedier
disposition of controversies. Furthermore, the courts of justice, for reasons of comity and
convenience, will shy away from a dispute until the system of administrative redress has been
completed and complied with, so as to give the administrative agency concerned every opportunity to
correct its error and dispose of the case. However, there are several exceptions to this rule.

The rule on the exhaustion of administrative remedies is intended to preclude a court from arrogating
unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an
administrative body of special competence. Thus, a case where the issue raised is a purely legal
question, well within the competence; and the jurisdiction of the court and not the
administrative agency, would clearly constitute an exception. Resolving questions of law,
which involve the interpretation and application of laws, constitutes essentially an exercise of
judicial power that is exclusively allocated to the Supreme Court and such lower courts the
Legislature may establish.
In this case, the parties are not disputing any factual matter on which they still need to present
evidence. The sole issue petitioners raised before the RTC in Civil Case No. 25843 was whether
Municipal Ordinance No. 98-01 was valid and enforceable despite the absence, prior to its
enactment, of a public hearing held in accordance with Article 276 of the Implementing Rules and
Regulations of the Local Government Code. This is undoubtedly a pure question of law, within
the competence and jurisdiction of the RTC to resolve.

Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly establishes the appellate
jurisdiction of this Court, and impliedly recognizes the original jurisdiction of lower courts over cases
involving the constitutionality or validity of an ordinance:

Section 5. The Supreme Court shall have the following powers:

xxxx

(2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the law or the Rules of
Court may provide, final judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation
is in question.

In J.M Tuason and Co., Inc. v. Court of Appeals, Ynot v. Intermediate Appellate
Court, and Commissioner of Internal Revenue v. Santos, the Court has affirmed the jurisdiction of the
RTC to resolve questions of constitutionality and validity of laws (deemed to include local ordinances)
in the first instance, without deciding questions which pertain to legislative policy. (Emphases
supplied, citations omitted.)

In Cagayan Electric Power and Light Co., Inc. (CEPALCO) v. City of Cagayan De Oro,35 the Court
initially conceded that as in Reyes, the failure of taxpayer CEPALCO to appeal to the Secretary of
Justice within the statutory period of 30 days from the effectivity of the ordinance should have been
fatal to its cause. However, the Court purposefully relaxed the application of the rules in view of the
more substantive matters.

Similar to Ongsuco and CEPALCO, the case at bar constitutes an exception to the general rule. Not
only does the instant Petition raise pure questions of law, but it also involves substantive matters
imperative for the Court to resolve.

Section 42 of the Revised Omnibus Tax Ordinance, as amended, imposing amusement tax on
golf courses is null and void as it is beyond the authority of respondent Cebu City to enact
under the Local Government Code.

The Local Government Code authorizes the imposition by local government units of amusement tax
under Section 140, which provides:

Sec. 140. Amusement Tax. - (a) The province may levy an amusement tax to be collected from the
proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia,
and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts
from admission fees.

(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their
proprietors, lessees, or operators and paid to the provincial treasurer before the gross receipts
 are divided between said proprietors, lessees, or operators and the distributors of the
cinematographic films.

(c) The holding of operas, concerts, dramas, recitals, painting, and art exhibitions, flower
shows, musical programs, literary and oratorical presentations, except pop, rock, or similar
concerts shall be exempt from the payment of the tax hereon imposed.

(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for
the payment of tax. In case of fraud or failure to pay the tax, the sangguniang
panlalawigan may impose such surcharges, interests and penalties as it may deem
appropriate.

(e) The proceeds from the amusement tax shall be shared equally by the province and "the
municipality where such amusement places are located. (Emphasis supplied.)

"Amusement places," as defined in Section 13l(c) of the Local Government Code, "include theaters,
cinemas, concert halls, circuses and other places of amusement where one seeks admission to
entertain oneself by seeing or viewing the show or performance."

The pronouncements of the Court in Pelizloy Realty Corporation v. The Province of Benguet36 are of
particular significance to this case. The Court, in Pelizloy Realty, declared null and void the second
paragraph of Article X, Section 59 of the Benguet Provincial Code, in so far as it imposes amusement
taxes on admission fees to resorts, swimming pools, bath houses, hot springs, and tourist spots.
Applying the principle of ejusdem generis, as well as the ruling in the PBA case, the Court
expounded on the authority of local government units to impose amusement tax under Section 140, in
relation to Section 131(c), of the Local Government Code, as follows:

Under the principle of ejusdem generis, "where a general word or phrase follows an enumeration of
particular and specific words of the same class or where the latter follow the former, the general word
or phrase is to be construed to include, or to be restricted to persons, things or cases akin to,
resembling, or of the same kind or class as those specifically mentioned."

The purpose and rationale of the principle was explained by the Court in National Power Corporation
v. Angas as follows:

The purpose of the rule on ejusdem generis is to give effect to both the particular and general words,
by treating the particular words as indicating the class and the general words as including all that is
embraced in said class, although not specifically named by the particular words. This is justified on
the ground that if the lawmaking body intended the general terms to be used in their unrestricted
sense, it would have not made an enumeration of particular subjects but would have used only
general terms. [2 Sutherland, Statutory Construction, 3rd ed., pp. 395-400].

In Philippine Basketball Association v. Court of Appeals, the Supreme Court had an opportunity to

interpret a starkly similar provision or the counterpart provision of Section 140 of the LGC in the Local
Tax Code then in effect. Petitioner Philippine Basketball Association (PBA) contended that it was
subject to the imposition by LGUs of amusement taxes (as opposed to amusement taxes imposed by
the national government). In support of its contentions, it cited Section 13 of Presidential Decree No.
231, otherwise known as the Local Tax Code of 1973, (which is analogous to Section 140 of the
LGC) providing the following:
Section 13. Amusement tax on admission. – The province shall impose a tax on admission to be
collected from the proprietors, lessees, or operators of theaters, cinematographs, concert halls,
circuses and other places of amusement x x x.

Applying the principle of ejusdem generis, the Supreme Court rejected PBA's assertions and rioted
that:

[I]n determining the meaning of the phrase 'other places of amusement', one must refer to the prior
enumeration of theaters, cinematographs, concert halls and circuses with artistic expression as their
common characteristic. Professional basketball games do not fall under the same category as
theaters, cinematographs, concert halls and circuses as the latter basically belong to artistic forms of
entertainment while the former caters to sports and gaming.

However, even as the phrase 'other places of amusement' was already clarified in Philippine
Basketball Association, Section 140 of the LGC adds to the enumeration of 'places of amusement'
which may properly be subject to amusement tax. Section 140 specifically mentions 'boxing stadia' in
addition to "theaters, cinematographs, concert halls [and] circuses" which were already mentioned in
PD No. 231. Also, 'artistic expression' as a characteristic does not pertain to 'boxing stadia'.

In the present case, the Court need not embark on a laborious effort at statutory construction. Section
131 (c) of the LGC already provides a clear definition of' amusement places':x x x x

Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a common
typifying characteristic in that they are all venues primarily for the staging of spectacles or the
holding of public shows, exhibitions, performances, and other events meant to be viewed by
an audience. Accordingly, 'other places of amusement' must be interpreted in light of the
typifying characteristic of being venues "where one seeks admission to entertain oneself by
seeing or viewing the show or performances" or being venues primarily used to stage
spectacles or hold public shows, exhibitions, performances, and other events meant to be
viewed by an audience.

As defined in The New Oxford American Dictionary, 'show' means "a spectacle or display of
something, typically an impressive one"; while 'performance' means "an act of staging or presenting a
play, a concert, or other form of entertainment." As such, the ordinary definitions of the words
'show' and 'performance' denote not only visual engagement (i.e., the seeing or viewing of
things) but also active doing (e.g., displaying, staging or presenting) such that actions are
manifested to, and (correspondingly) perceived by an audience.

Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist spots
cannot be considered venues primarily "where one seeks admission to entertain oneself by seeing or
viewing the show or performances". While it is true that they may be venues where people are
visually engaged, they are not primarily venues for their proprietors or operators to actively display,
stage or present shows and/or performances.

Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to the same
category or class as theaters, cinemas, concert halls, circuses, and boxing stadia. It follows that they
cannot be considered as among the 'other places of amusement' contemplated by Section 140 of the
LGC and which may properly be subject to amusement taxes.37 (Emphases supplied, citations
omitted.)

In light of Pelizloy Realty, a golf course cannot be considered a place of amusement. As petitioner
asserted, people do not enter a golf course to see or view a show or performance. Petitioner also, as
proprietor or operator of the golf course, does not actively display, stage, or present a show or
performance. People go to a golf course to engage themselves in a physical sport activity, i.e., to play
golf; the same reason why people go to a gym or court to play badminton or tennis or to a shooting
range for target practice, yet there is no showing herein that such gym, court, or shooting range is
similarly considered an amusement place subject to amusement tax. There is no basis for singling out
golf courses for amusement tax purposes from other places where people go to play sports. This is in
contravention of one of the fundamental principles of local taxation: that the "[t]axation shall be
uniform in each local government unit."38 Uniformity of taxation, like the kindred concept of equal
protection, requires that all subjects or objects of taxation, similarly situated, are to be treated alike
both in privileges and liabilities.39

Not lost on the Court is its declaration in Manila Electric Co. v. Province of Laguna40 that under the
1987 Constitution, "where there is neither a grant nor a prohibition by statute, the tax power [of local
government units] must be deemed to exist although Congress may provide statutory limitations and
guidelines." Section 186 of the Local Government Code also expressly grants local government units
the following residual power to tax:

Sec. 186. Power to Levy Other Taxes; Fees, or Charges. – Local government units may exercise
the power to levy taxes, fees, or charges on any base or subject not otherwise specifically
enumerated herein or taxed under the provisions of the National Internal Revenue Code, as
amended, or other applicable laws: Provided, that the taxes, fees, or charges shall not be unjust,
excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the
ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing
conducted for the purpose.1awp++i1 (Emphasis supplied.)

Respondents, however, cannot claim that Section 42 of the Revised Omnibus Tax Ordinance, as
amended, imposing amusement tax on golf courses, was enacted pursuant to the residual power to
tax of respondent Cebu City. A local government unit may exercise its residual power to tax when
there is neither a grant nor a prohibition by statute; or when such taxes, fees, or charges are not
otherwise specifically enumerated in the Local Government Code, National Internal Revenue Code,
as amended, or other applicable laws. In the present case, Section 140, in relation to Section 131 (c),
of the Local Government Code already explicitly and clearly cover amusement tax and respondent
Cebu City must exercise its authority to impose amusement tax within the limitations and guidelines
as set forth in said statutory provisions.

WHEREFORE, in view of all the foregoing, the Court GRANTS the instant Petition,

and REVERSES and SETS ASIDE the Resolution dated March 14, 2007 and the Order dated
October 3, 2007 of the Regional Trial Court, Cebu City, Branch 9 in Civil Case No. CEB-31988. The
Court DECLARES NULL and VOID the following: (a) Section 42 of the Revised Omnibus Tax
Ordinance of the City of Cebu, as amended by City Tax Ordinance Nos. LXXXII and LXXXIV, insofar
as it imposes amusement tax of 20% on the gross receipts on entrance, playing green, and/or
admission fees of golf courses; (b) the tax assessment against petitioner for amusement tax on its
golf course for the year 1998 in the amount of Pl,373,761.24, plus surcharges and interest pertaining
to said amount, issued by the Office of the City Treasurer, City of Cebu; and (c) the Closure Order
dated December 28, 2005 issued against Alta Vista Golf and Country Club by the Office of the Mayor,
City of Cebu. The Court also ORDERS the City of Cebu to refund to Alta Vista Golf and Country Club
the amusement tax, penalties, surcharge, and interest paid under protest by the latter in the total
amount of P2, 750,249 .17 or to apply the same amount as tax credit against existing or future tax
liability of said Club.

SO ORDERED.
G.R. No. 169435             February 27, 2008

MUNICIPALITY OF NUEVA ERA, ILOCOS NORTE, represented by its Municipal Mayor,

CAROLINE ARZADON-GARVIDA, petitioner,
vs.
MUNICIPALITY OF MARCOS, ILOCOS NORTE, represented by its Municipal Mayor,
SALVADOR PILLOS, and the HONORABLE COURT OF APPEALS, respondents.

DECISION

REYES, R.T., J.:

AS the law creating a municipality fixes its boundaries, settlement of boundary disputes between
municipalities is facilitated by carrying into effect the law that created them.

Any alteration of boundaries that is not in accordance with the law creating a municipality is not the
carrying into effect of that law but its amendment, which only the Congress can do.1

For Our review on certiorari is the Decision2 of the Court of Appeals (CA) reversing to a certain extent
that3 of the Regional Trial Court (RTC), Branch 12, Laoag City, Ilocos Norte, in a case that originated
from the Sangguniang Panlalawigan (SP) of Ilocos Norte about the boundary dispute between the
Municipalities of Marcos and Nueva Era in Ilocos Norte.

The CA declared that Marcos is entitled to have its eastern boundary extended up "to the boundary
line between the province of Ilocos Norte and Kalinga-Apayao."4 By this extension of Marcos' eastern
boundary, the CA allocated to Marcos a portion of Nueva Era's territory.

The Facts

The Municipality of Nueva Era was created from the settlements of Bugayong, Cabittaoran,
Garnaden, Padpadon, Padsan, Paorpatoc, Tibangran, and Uguis which were previously organized
as rancherias, each of which was under the independent control of a chief. Governor General Francis
Burton Harrison, acting on a resolution passed by the provincial government of Ilocos Norte, united
these rancherias and created the township of Nueva Era by virtue of Executive Order (E.O.) No.
66 5 dated September 30, 1916.

The Municipality of Marcos, on the other hand, was created on June 22, 1963 pursuant to Republic
Act (R.A.) No. 3753 entitled "An Act Creating the Municipality of Marcos in the Province of Ilocos
Norte." Section 1 of R.A. No. 3753 provides:

SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and Agunit in
the Municipality of Dingras, Province of Ilocos Norte, are hereby separated from the said
municipality and constituted into a new and separate municipality to be known as the
Municipality of Marcos, with the following boundaries:

On the Northwest, by the barrios Biding-Rangay boundary going down to the barrios
Capariaan-Gabon boundary consisting of foot path and feeder road; on the Northeast, by the
Burnay River which is the common boundary of barrios Agunit and Naglayaan; on the East, by
the Ilocos Norte-Mt. Province boundary; on the South, by the Padsan River which is at the
same time the boundary between the municipalities of Banna and Dingras; on the West and
Southwest, by the boundary between the municipalities of Batac and Dingras.
 The Municipality of Marcos shall have its seat of government in the barrio of Biding.

Based on the first paragraph of the said Section 1 of R.A. No. 3753, it is clear that Marcos shall be
derived from the listed barangays of Dingras, namely: Capariaan, Biding, Escoda, Culao, Alabaan,
Ragas and Agunit. The Municipality of Nueva Era or any of its barangays was not mentioned. Hence,
if based only on said paragraph, it is clear that Nueva Era may not be considered as a source of
territory of Marcos.

There is no issue insofar as the first paragraph is concerned which named only Dingras as the mother
municipality of Marcos. The problem, however, lies in the description of Marcos' boundaries as stated
in the second paragraph, particularly in the phrase: "on the East, by the Ilocos Norte-Mt. Province
boundary."

It must be noted that the term "Mt. Province" stated in the above phrase refers to the present
adjoining provinces of Benguet, Mountain Province, Ifugao, Kalinga and Apayao, which were then a
single province.

Mt. Province was divided into the four provinces of Benguet, Mountain Province, Ifugao, and Kalinga-
Apayao by virtue of R.A. No. 4695 which was enacted on June 18, 1966. On February 14, 1995, the
province of Kalinga-Apayao, which comprises the sub-provinces of Kalinga and Apayao, was further
converted into the regular provinces of Kalinga and Apayao pursuant to R.A. No. 7878.

The part of then Mt. Province which was at the east of Marcos is now the province of Apayao. Hence,
the eastern boundary referred to by the second paragraph of Section 1 of R.A. No. 3753 is the
present Ilocos Norte-Apayao boundary.

On the basis of the said phrase, which described Marcos' eastern boundary, Marcos claimed that the
middle portion of Nueva Era, which adjoins its eastern side, formed part of its territory. Its reasoning
was founded upon the fact that Nueva Era was between Marcos and the Ilocos Norte-Apayao
boundary such that if Marcos was to be bounded on the east by the Ilocos Norte-Apayao boundary,
part of Nueva Era would consequently be obtained by it.6

Marcos did not claim any part of Nueva Era as its own territory until after almost 30 years,7 or only on
March 8, 1993, when its Sangguniang Bayan passed Resolution No. 93-015.8 Said resolution was
entitled: "Resolution Claiming an Area which is an Original Part of Nueva Era, But Now Separated
Due to the Creation of Marcos Town in the Province of Ilocos Norte."

Marcos submitted its claim to the SP of Ilocos Norte for its consideration and approval. The SP, on
the other hand, required Marcos to submit its position paper.9

In its position paper, Marcos alleged that since its northeastern and eastern boundaries under R.A.
No. 3753 were the Burnay River and the Ilocos Norte-Mountain Province boundary, respectively, its
eastern boundary should not be limited to the former Dingras-Nueva Era boundary, which was
coterminous and aligned with the eastern boundary of Dingras. According to Marcos, its eastern
boundary should extend further to the east or up to the Ilocos-Norte-Mt. Province boundary pursuant
to the description of its eastern boundary under R.A. No. 3753.10

In view of its claim over the middle portion of Nueva Era, Marcos posited that Nueva Era was cut into
two parts. And since the law required that the land area of a municipality must be compact and
contiguous, Nueva Era's northern isolated portion could no longer be considered as its territory but
that of Marcos'. Thus, Marcos claimed that it was entitled not only to the middle portion11 of Nueva
Era but also to Nueva Era's isolated northern portion. These areas claimed by Marcos were
within Barangay Sto. Niño, Nueva Era.

Nueva Era reacted to the claim of Marcos through its Resolution No. 1, Series of 1993. It alleged that
since time immemorial, its entire land area was an ancestral domain of the "tinguians," an indigenous
cultural community. It argued to the effect that since the land being claimed by Marcos must be
protected for the tinguians, it must be preserved as part of Nueva Era.12

According to Nueva Era, Marcos was created out of the territory of Dingras only. And since R.A. No.
3753 specifically mentioned seven (7) barrios of Dingras to become Marcos, the area which should
comprise Marcos should not go beyond the territory of said barrios.13

From the time Marcos was created in 1963, its eastern boundary had been considered to be aligned
and coterminous with the eastern boundary of the adjacent municipality of Dingras. However, based
on a re-survey in 1992, supposedly done to conform to the second paragraph of Section 1 of R.A. No.
3753, an area of 15,400 hectares of Nueva Era was alleged to form part of Marcos.14 This was the
area of Barangay Sto. Niño, Nueva Era that Marcos claimed in its position paper.

On March 29, 2000, the SP of Ilocos Norte ruled in favor of Nueva Era. The fallo of its
decision15 reads:

WHEREFORE, in view of all the foregoing, this Body has no alternative but to dismiss, as it
hereby DISMISSES said petition for lack of merit. The disputed area consisting of 15,400
hectares, more or less, is hereby declared as part and portion of the territorial jurisdiction of
respondent Nueva Era.16

R.A. No. 3753 expressly named the barangays that would comprise Marcos, but none of Nueva
Era's barangays were mentioned. The SP thus construed, applying the rule of expressio unius est
exclusio alterius, that no part of Nueva Era was included by R.A. No. 3753 in creating Marcos.17

The SP ratiocinated that if Marcos was to be bounded by Mt. Province, it would encroach upon a
portion, not only of Nueva Era but also of Abra. Thus:

x x x Even granting, for the sake of argument, that the eastern boundary of Marcos is indeed
Mountain Province, Marcos will then be claiming a portion of Abra because the province,
specifically Barangay Sto. Niño, Nueva Era, is actually bounded on the East by the Province of
Abra. Abra is situated between and separates the Provinces of Ilocos Norte and Mountain
Province.

This is precisely what this body would like to avoid. Statutes should be construed in the light of
the object to be achieved and the evil or mischief to be suppressed, and they should be given
such construction as will advance the object, suppress the mischief and secure the benefits
intended.18 (Citations omitted)

The SP further explained:

Invariably, it is not the letter, but the spirit of the law and the intent of the legislature that is
important. When the interpretation of the statute according to the exact and literal import of its
words would lead to absurdity, it should be construed according to the spirit and reason,
disregarding if necessary the letters of the law. It is believed that congress did not intend to
have this absurd situation to be created when it created the Municipality of Marcos. This body,
by the mandate given to it by the RA 7160 otherwise known Local Government Code, so
 believes that respondent Nueva Era or any portion thereof has been excluded from the ambit
of RA 3753. Under the principle of "espressio (sic) unios (sic) est exclusio alterius," by
expressly naming the barangays  that will comprise the town of Marcos, those not mentioned
are deemed excluded. In Republic Act 4354, where Section 2 thereof enumerated the barrios
comprising the City of Davao excluding the petitioner Barrio Central as part of the said City, the
court held that there arose a prima facie conclusion that the said law abolished Barrio Central
as part of Davao City.

Historically, the hinterlands of Nueva Era have been known to be the home of our brothers and
sisters belonging to peculiar groups of non-(C)hristian inhabitants with their own rich customs
and traditions and this body takes judicial notice that the inhabitants of Nueva Era have
proudly claimed to be a part of this rich culture. With this common ancestral heritage which
unfortunately is absent with Marcos, let it not be disturbed.19 (Emphasis ours and citations
omitted)

RTC Decision

On appeal by Marcos, the RTC affirmed the decision of the SP in its decision20 of March 19, 2001.
The dispositive part of the RTC decision reads:

WHEREFORE, the instant appeal is hereby DISMISSED. The questioned decision of

the Sangguniang Panlalawigan of Ilocos Norte is hereby AFFIRMED.

No costs.

SO ORDERED.21

The RTC reasoned out in this wise:

The position of the Municipality of Marcos is that the provision of R.A. 3753 as regards its
boundary on the East which is the "Ilocos Norte-Mt. Province" should prevail.

On the other hand, the Municipality of Nueva Era posits the theory that only the barrios of the
Municipality of Dingras as stated in R.A. 3753 should be included in the territorial jurisdiction of
the Municipality of Marcos. The Sangguniang Panlalawigan agreed with the position of Nueva
Era.

xxxx

An examination of the Congressional Records during the deliberations of the R.A. 3753
(House Bill No. 3721) shows the Explanatory Note of Congressman Simeon M. Valdez,
2nd District, Ilocos Norte, to wit:

EXPLANATORY NOTE

This bill seeks to create in the Province of Ilocos Norte a new municipality to be known
as the Municipality of Marcos, to be comprised by the present barrios of Capariaan,
Biding Escoda, Culao, Alabaan, Ragas and Agunit, all in the Municipality of Dingras of
the same province. The seat of government will be in the sitio of San Magro in the
present barrio of Ragas.
 xxxx

On the other hand, the Municipality of Dingras will not be adversely affected too much
because its finances will still be sound and stable. Its capacity to comply with its
obligations, especially to its employees and personnel, will not be diminished nor its
operations paralyzed. On the contrary, economic development in both the mother and
the proposed municipalities will be accelerated.

In view of the foregoing, approval of this bill is earnestly requested.

(Sgd.) SIMEON M. VALDEZ

Congressman, 2nd District
Ilocos Norte22

Parenthetically, the legislative intent was for the creation of the Municipality of Marcos,
Ilocos Norte from the barrios (barangays) of the Municipality of Dingras, Ilocos Norte
only. Hence, the Municipality of Marcos cannot add any area beyond the territorial
jurisdiction of the Municipality of Dingras, Ilocos Norte. This conclusion might have been
different only if the area being claimed by the Municipality of Marcos is within the
territorial jurisdiction of the Municipality of Dingras and not the Municipality of Nueva
Era. In such case, the two conflicting provisions may be harmonized by including such
area within the territorial jurisdiction of the Municipality of Dingras as within the territorial
jurisdiction of the Municipality of Marcos.23 (Emphasis ours)

CA Disposition

Still determined to have a more extensive eastern boundary, Marcos filed a petition for review24 of the
RTC decision before the CA. The issues raised by Marcos before the CA were:

1. Whether or not the site of Hercules Minerals and Oil, Inc. which is within a Government
Forest Reservation in Barangay Sto. Niño, formerly of Nueva Era, is a part of the newly
created Municipality of Marcos, Ilocos Norte.

2. Whether or not the portion of Barangay Sto. Niño on the East which is separated from
Nueva Era as a result of the full implementation of the boundaries of the new Municipality of
Marcos belongs also to Marcos or to Nueva Era.25

The twin issues involved two portions of Nueva Era, viz.: (1) middle portion, where Hercules Minerals
and Oil, Inc. is located; and (2) northern portion of Nueva Era, which, according to Marcos, was
isolated from Nueva Era in view of the integration to Marcos of said middle portion.

Marcos prayed before the CA that the above two portions of Nueva Era be declared as part of its own
territory. It alleged that it was entitled to the middle portion of Nueva Era in view of the description of
Marcos' eastern boundary under R.A. No. 3753. Marcos likewise contended that it was entitled to the
northern portion of Nueva Era which was allegedly isolated from Nueva Era when Marcos was
created. It posited that such isolation of territory was contrary to law because the law required that a
municipality must have a compact and contiguous territory.26

In a Decision27 dated June 6, 2005, the CA partly reversed the RTC decision with the following
disposition:
 WHEREFORE, we partially GRANT the petition treated as one for certiorari. The Decisions
of both the Sangguniang Panlalawigan and Regional Trial Court of Ilocos
Norte are REVERSED and SET ASIDE insofar as they made the eastern boundary of the
municipality of Marcos co-terminous with the eastern boundary of Dingras town, and another is
rendered extending the said boundary of Marcos to the boundary line between the province of
Ilocos Norte and Kalinga-Apayao, but the same Decisions are AFFIRMED with respect to the
denial of the claim of Marcos to the detached northern portion of barangay Sto. Niño which
should, as it is hereby ordered to, remain with the municipality of Nueva Era. No costs.

SO ORDERED.28

In concluding that the eastern boundary of Marcos was the boundary line between Ilocos Norte and
Kalinga-Apayao, the CA gave the following explanation:

Clearly then, both the SP and the RTC erred when they ruled that the eastern boundary of Marcos is
only coterminous with the eastern boundary of the adjacent municipality of Dingras and refused to
extend it up to the boundary line between the provinces of Ilocos Norte and Mountain Province
(Kalinga-Apayao). R.A. No. 3753, the law creating Marcos, is very explicit and leaves no room for
equivocation that the boundaries of Marcos town are:

"On the Northwest by the barrios Biding-Rangay boundary going down to the barrios
Capariaan-Gabon boundary consisting of foot path and feeder road; on the Northeast,
by the Burnay River which is the common boundary of barrios Agunit and
Naglayaan; on the East, by the Ilocos Norte-Mt. Province boundary; on the South
by the Padsan River, which is at the same time the boundary between the municipalities
of Banna and Dingras; on the West and Southwest by the boundary between the
municipalities of Batac and Dingras."

To stop short at the eastern boundary of Dingras as the eastern boundary also of Marcos and
refusing to go farther to the boundary line between Ilocos Norte and Mountain Province
(Kalinga-Apayao) is tantamount to amending the law which Congress alone can do. Both the
SP and RTC have no competence to undo a valid act of Congress.

It is not correct to say that Congress did not intend to take away any part of Nueva Era and
merge it with Marcos for it is chargeable with conclusive knowledge that when it provided that
the eastern boundary of Marcos is the boundary line between Ilocos Norte and Mountain
Province, (by the time of both the SB and RTC Decision was already Kalinga-Apayao), it would
be cutting through a portion of Nueva Era. As the law is written so must it be applied. Dura lex
sed lex!29

The CA likewise held that the province Abra was not located between Marcos and Kalinga-Apayao;
and that Marcos would not encroach upon a portion of Abra for it to be bounded by Kalinga-Apayao,
to wit:

Nueva Era's contention that to lay out the eastern jurisdiction of Marcos to the boundary line
between Ilocos Norte and Mountain Province (Kalinga-Apayao) would mean annexing part of
the municipality of Itnig, province of Abra to Marcos as Abra is between Ilocos Norte and
Mountain Province is geographically erroneous. From Nueva Era's own map of Region 1,
which also depicts the locations of Kalinga-Apayao, Abra, Mountain Province, Benguet and
Nueva Vizcaya after the partition of the old Mountain Province into the provinces of Kalinga-
Apayao, Ifugao, Mountain Province and Benguet, the province of Abra is situated far to the
south of Kalinga Apayao and is between the latter and the present Mountain Province, which is
 farther south of Abra. Abra is part of the eastern boundary of Ilocos Sur while Kalinga-Apayao
is the eastern boundary of Ilocos Norte. Hence, in no way will the eastern boundary of the
municipality of Marcos encroach upon a portion of Abra.30

However, Marcos' claim over the alleged isolated northern portion of Nueva Era was denied. The CA
ruled:

Going now to the other area involved, i.e., the portion of Sto. Niño that is separated from its
mother town Nueva Era and now lies east of the municipalities of Solsona and Dingras and
north of Marcos, it bears stressing that it is not included within the area of Marcos as defined
by law. But since it is already detached from Sto. Niño, Marcos is laying claim to it to be
integrated into its territory by the SP because it is contiguous to a portion of said municipality.

We hold that the SP has no jurisdiction or authority to act on the claim, for it will necessarily
substantially alter the north eastern and southern boundaries of Marcos from that defined by
law and unduly enlarge its area. Only Congress can do that. True, the SP may substantially
alter the boundary of a barangay within its jurisdiction. But this means the alteration of the
boundary of a barangay in relation to another barangay within the same municipality for as
long as that will not result in any change in the boundary of that municipality. The area in
dispute therefore remains to be a part of Sto. Niño, a barangay of Nueva Era although
separated by the newly created Marcos town pursuant to Section 7(c) of the 1991 Local
Government Code which states:

SEC. 7. Creation and Conversion. - As a general rule, the creation of a local
government unit or its conversion from one level to another shall be based on verifiable
indicators of viability and projected capacity to provide services, to wit:

xxxx

(c) Land Area. - It must be contiguous, unless it comprises two or more islands or is
separated by a local government unit independent of the others; properly identified
by metes and bounds with technical descriptions; and sufficient to provide for such
basic services and facilities to meet the requirements of its populace.31

The CA also expressed the view that Marcos adopted the wrong mode of appeal in bringing the case
to it. The case, according to the CA, was appealable only to the RTC. Nonetheless, despite its
pronouncement that the case was dismissible, the CA took cognizance of the same by treating it as
one for certiorari, to wit:

A final word. At the outset, we agonized over the dilemma of choosing between dismissing
outright the petition at bar or entertaining it. This is for the simple reason that a petition for
review is a mode of appeal and is not appropriate as the Local Government Code provides for
the remedy of appeal in boundary disputes only to the Regional Trial Court but not any further
appeal to this Court. Appeal is a purely statutory right. It cannot be exercised unless it is
expressly granted by law. This is too basic to require the citation of supporting authority.

xxxx

By the same token, since the Local Government Code does not explicitly grant the right of
further appeal from decisions of the RTCs in boundary disputes between or among local
government units, Marcos town cannot exercise that right from the adverse decision of the
RTC of Ilocos Norte. Nonetheless, because of the transcendental legal and jurisdictional
 issues involved, we solved our inceptive dilemma by treating the petition at bar as a special
civil action for certiorari.32

Nueva Era was not pleased with the decision of the CA. Hence, this petition for review on certiorari
under Rule 45.

Issues

Nueva Era now raises the following issues:

a) Whether or not, the Court of Appeals has jurisdiction on the Petition for Review on Appeal,
since Sec. 119 of the Local Government Code, which provides that "An appeal to the Decision
of the Sangguniang Panlalawigan is exclusively vested to the Regional Trial Court, without
further Appeal to the Court of Appeals";

b) Whether or not, the Court of Appeals gravely abused its discretion, in treating the Petition
for Review On Appeal, filed under Rule 45, Revised Rules of Court, as a Petition
for Certiorari, under Rule 65 of the Revised Rules of Court;

c) Whether or not, the Court of Appeals erred in its appreciation of facts, in declaring that
MARCOS East is not coterminous with the Eastern boundary of its mother town-Dingras. That
it has no factual and legal basis to extend MARCOS territory beyond Brgys. Agunit (Ferdinand)
and Culao (Elizabeth) of Marcos, and to go further East, by traversing and
disintegrating Brgy. Sto. Niño, and drawing parallel lines from Sto. Niño, there lies Abra, not
Mt. Province or Kalinga-Apayao.33

Basically, there are two (2) issues to resolve here: (1) whether or not the mode of appeal adopted by
Marcos in bringing the case to the CA is proper; and (2) whether or not the eastern boundary of
Marcos extends over and covers a portion of Nueva Era.

Our Ruling

Marcos correctly appealed the RTC judgment via petition for review under Rule 42.

Under Section 118(b) of the Local Government Code, "(b)oundary disputes involving two (2) or more
municipalities within the same province shall be referred for settlement to the sangguniang
panlalawigan concerned." The dispute shall be formally tried by the said sanggunian in case the
disputing municipalities fail to effect an amicable settlement.34

The SP of Ilocos validly took cognizance of the dispute between the parties. The appeal of the SP
judgment to the RTC was likewise properly filed by Marcos before the RTC. The problem, however,
lies in whether the RTC judgment may still be further appealed to the CA.

The CA pronounced that the RTC decision on the boundary dispute was not appealable to it. It ruled
that no further appeal of the RTC decision may be made pursuant to Section 119 of the Local
Government Code35 which provides:

SECTION 119. Appeal. - Within the time and manner prescribed by the Rules of Court, any
party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court
having jurisdiction over the area in dispute. The Regional Trial Court shall decide the appeal
 within one (1) year from the filing thereof. Pending final resolution of the disputed area prior to
the dispute shall be maintained and continued for all legal purposes.

The CA concluded that since only the RTC was mentioned as appellate court, the case may no
longer be further appealed to it. The CA stated that "(a)ppeal is a purely statutory right. It cannot be
exercised unless it is expressly granted by law. This is too basic to require the citation of supporting
authority."36

The CA, however, justified its taking cognizance of the case by declaring that: "because of the
transcendental legal and jurisdictional issues involved, we solved our inceptive dilemma by treating
the petition at bar as a special civil action for certiorari."37

The CA erred in declaring that only the RTC has appellate jurisdiction over the judgment of the SP.

True, appeal is a purely statutory right and it cannot be exercised unless it is expressly granted by
law. Nevertheless, the CA can pass upon the petition for review precisely because the law allows it.

Batas Pambansa (B.P.) Blg. 129 or the Judiciary Reorganization Act of 1980, as amended by R.A.
No. 7902,38 vests in the CA the appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, among others.39 B.P. Blg. 129 has been further supplemented by the 1997 Rules of
Civil Procedure, as amended, which provides for the remedy of appeal via petition for review under
Rule 42 to the CA in cases decided by the RTC in the exercise of its appellate jurisdiction.

Thus, the CA need not treat the appeal via petition for review filed by Marcos as a petition
for certiorari to be able to pass upon the same. B.P. Blg. 129, as amended, which is supplemented by
Rule 42 of the Rules of Civil Procedure, gives the CA the authority to entertain appeals of such
judgments and final orders rendered by the RTC in the exercise of its appellate jurisdiction.

At the time of creation of Marcos, approval in a plebiscite of the creation of a local

government unit is not required.

Section 10, Article X of the 1987 Constitution provides that:

No province, city, municipality, or barangay may be created, divided, merged, abolished, or its
boundary substantially altered, except in accordance with the criteria established in the local
government code and subject to approval by a majority of the votes cast in a plebiscite in the
political units directly affected.40

The purpose of the above constitutional provision was acknowledged by the Court through Justice
Reynato S. Puno in Miranda v. Aguirre,41 where it was held that:

The 1987 Constitution, more than any of our previous Constitutions, gave more reality to the
sovereignty of our people for it was borne out of the people power in the 1986 EDSA
revolution. Its Section 10, Article X addressed the undesirable practice in the past whereby
local government units were created, abolished, merged or divided on the basis of the vagaries
of politics and not of the welfare of the people. Thus, the consent of the people of the local
government unit directly affected was required to serve as a checking mechanism to any
exercise of legislative power creating, dividing, abolishing, merging or altering the boundaries
of local government units. It is one instance where the people in their sovereign capacity
decide on a matter that affects them - direct democracy of the people as opposed to
 democracy thru people's representatives. This plebiscite requirement is also in accord with the
philosophy of the Constitution granting more autonomy to local government units.42

Nueva Era contends that the constitutional and statutory43 plebiscite requirement for the creation of a
local government unit is applicable to this case. It posits that the claim of Marcos to its territory should
be denied due to lack of the required plebiscite.

We agree with Nueva Era's contention that Marcos' claim over parts of its territory is not tenable.
However, the reason is not the lack of the required plebiscite under the 1987 and 1973 constitutions
and the Local Government Code of 1991 but other reasons as will be discussed below.

At the time Marcos was created, a plebiscite was not required by law to create a local government
unit. Hence, Marcos was validly created without conducting a plebiscite. As a matter of fact, no
plebiscite was conducted in Dingras, where it was derived.

Lex prospicit, non respicit. The law looks forward, not backward.44 It is the basic norm that provisions
of the fundamental law should be given prospective application only, unless legislative intent for its
retroactive application is so provided.45

In the comparable case of Ceniza v. Commission on Elections46 involving the City of Mandaue, the
Court has this to say:

Petitioners assail the charter of the City of Mandaue as unconstitutional for not having been
ratified by the residents of the city in a plebiscite. This contention is untenable. The
Constitutional requirement that the creation, division, merger, abolition, or alteration of the
boundary of a province, city, municipality, or barrio should be subject to the approval by the
majority of the votes cast in a plebiscite in the governmental unit or units affected is a new
requirement that came into being only with the 1973 Constitution. It is prospective in
character and therefore cannot affect the creation of the City of Mandaue which came into
existence on June 21, 1969.47 (Citations omitted and underlining supplied).

Moreover, by deciding this case, We are not creating Marcos but merely interpreting the law that
created it. Its creation was already a fait accompli. Therefore, there is no reason for Us to further
require a plebiscite.

As pointed out by Justice Isagani Cruz, to wit:

Finally, it should be observed that the provisions of the Constitution should be given only a
prospective application unless the contrary is clearly intended. Were the rule otherwise, rights
already acquired or vested might be unduly disturbed or withdrawn even in the absence of an
unmistakable intention to place them within the scope of the Constitution.48

No part of Nueva Era's territory was taken for the creation of Marcos under R.A. No. 3753.

Only the barrios (now barangays) of Dingras from which Marcos obtained its territory are named in
R.A. No. 3753. To wit:

SECTION 1. The barrios of Capariaan, Biding, Escoda, Culao, Alabaan, Ragas and Agunit in
the Municipality of Dingras, Province of Ilocos Norte, are hereby separated from the said
municipality and constituted into a new and separate municipality to be known as the
Municipality of Marcos, with the following boundaries:
Since only the barangays of Dingras are enumerated as Marcos' source of territory, Nueva Era's
territory is, therefore, excluded.

Under the maxim expressio unius est exclusio alterius, the mention of one thing implies the exclusion
of another thing not mentioned. If a statute enumerates the things upon which it is to operate,
everything else must necessarily and by implication be excluded from its operation and effect.49 This
rule, as a guide to probable legislative intent, is based upon the rules of logic and natural workings of
the human mind.50

Had the legislature intended other barangays from Nueva Era to become part of Marcos, it could
have easily done so by clear and concise language. Where the terms are expressly limited to certain
matters, it may not by interpretation or construction be extended to other matters.51 The rule proceeds
from the premise that the legislature would not have made specified enumerations in a statute had
the intention been not to restrict its meaning and to confine its terms to those expressly mentioned.52

Moreover, since the barangays of Nueva Era were not mentioned in the enumeration
of barangays out of which the territory of Marcos shall be set, their omission must be held to have
been done intentionally. This conclusion finds support in the rule of casus omissus pro omisso
habendus est, which states that a person, object or thing omitted from an enumeration must be held
to have been omitted intentionally.53

Furthermore, this conclusion on the intention of the legislature is bolstered by the explanatory note of
the bill which paved the way for the creation of Marcos. Said explanatory note mentioned only
Dingras as the mother municipality of Marcos.

Where there is ambiguity in a statute, as in this case, courts may resort to the explanatory note to
clarify the ambiguity and ascertain the purpose and intent of the statute.54

Despite the omission of Nueva Era as a mother territory in the law creating Marcos, the latter still
contends that said law included Nueva Era. It alleges that based on the description of its boundaries,
a portion of Nueva Era is within its territory.

The boundaries of Marcos under R.A. No. 3753 read:

On the Northwest, by the barrios Biding-Rangay boundary going down to the barrios
Capariaan-Gabon boundary consisting of foot path and feeder road; on the Northeast, by the
Burnay River which is the common boundary of barrios Agunit and Naglayaan; on the East, by
the Ilocos Norte-Mt. Province boundary; on the South, by the Padsan River which is at the
same time the boundary between the municipalities of Banna and Dingras; on the West and
Southwest, by the boundary between the municipalities of Batac and Dingras.

Marcos contends that since it is "bounded on the East, by the Ilocos Norte-Mt. Province boundary," a
portion of Nueva Era formed part of its territory because, according to it, Nueva Era is between the
Marcos and Ilocos Norte-Mt. Province boundary. Marcos posits that in order for its eastern side to
reach the Ilocos Norte-Mt. Province boundary, it will necessarily traverse the middle portion of Nueva
Era.

Marcos further claims that it is entitled not only to the middle portion of Nueva Era but also to its
northern portion which, as a consequence, was isolated from the major part of Nueva Era.

We cannot accept the contentions of Marcos.

Only Dingras is specifically named by law as source territory of Marcos. Hence, the said description
of boundaries of Marcos is descriptive only of the listed barangays of Dingras as a compact and
contiguous territory.

Considering that the description of the eastern boundary of Marcos under R.A. No. 3753 is
ambiguous, the same must be interpreted in light of the legislative intent.

The law must be given a reasonable interpretation, to preclude absurdity in its application.55 We thus
uphold the legislative intent to create Marcos out of the territory of Dingras only.

Courts must give effect to the general legislative intent that can be discovered from or is unraveled by
the four corners of the statute, and in order to discover said intent, the whole statute, and not only a
particular provision thereof, should be considered.56 Every section, provision or clause of the statute
must be expounded by reference to each other in order to arrive at the effect contemplated by the
legislature. The intention of the legislator must be ascertained from the whole text of the law, and
every part of the act is to be taken into view.57

It is axiomatic that laws should be given a reasonable interpretation, not one which defeats the very
purpose for which they were passed. This Court has in many cases involving the construction of
statutes always cautioned against narrowly interpreting a statute as to defeat the purpose of the
legislature and stressed that it is of the essence of judicial duty to construe statutes so as to avoid
such a deplorable result (of injustice or absurdity) and that therefore "a literal interpretation is to be
rejected if it would be unjust or lead to absurd results."58

Statutes are to be construed in the light of the purposes to be achieved and the evils sought to be
remedied. Thus, in construing a statute, the reason for its enactment should be kept in mind and the
statute should be construed with reference to the intended scope and purpose. The court may
consider the spirit and reason of the statute, where a literal meaning would lead to absurdity,
contradiction, injustice, or would defeat the clear purpose of the lawmakers.59

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals is

partly REVERSED. The Decision of the Regional Trial Court in Ilocos Norte is Reinstated.

SO ORDERED.
G.R. No. 79094 June 22, 1988

MANOLO P. FULE, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, respondent.

Balagtas P. Ilagan for petitioner.

The Solicitor General for respondent.

MELENCIO-HERRERA, J.:

This is a Petition for Review on certiorari of the Decision of respondent Appellate Court, which
affirmed the judgment of the Regional Trial Court, Lucena City, Branch LIV, convicting petitioner (the
accused-appellant) of Violation of Batas Pambansa Blg. 22 (The Bouncing Checks Law) on the basis
of the Stipulation of Facts entered into between the prosecution and the defense during the pre-trial
conference in the Trial Court. The facts stipulated upon read:

a) That this Court has jurisdiction over the person and subject matter of this case;

b) That the accused was an agent of the Towers Assurance Corporation on or before
January 21, 1981;

c) That on January 21, 1981, the accused issued and made out check No. 26741, dated
January 24, 1981 in the sum of P2,541.05;

d) That the said check was drawn in favor of the complaining witness, Roy Nadera;

e) That the check was drawn in favor of the complaining witness in remittance of
collection;

f) That the said check was presented for payment on January 24, 1981 but the same
was dishonored for the reason that the said checking account was already closed;

g) That the accused Manolo Fule has been properly Identified as the accused party in
this case.

At the hearing of August 23, 1985, only the prosecution presented its evidence consisting of Exhibits
"A," "B" and "C." At the subsequent hearing on September 17, 1985, petitioner-appellant waived the
right to present evidence and, in lieu thereof, submitted a Memorandum confirming the Stipulation of
Facts. The Trial Court convicted petitioner-appellant.

On appeal, respondent Appellate Court upheld the Stipulation of Facts and affirmed the judgment of
conviction. 1

Hence, this recourse, with petitioner-appellant contending that:

The Honorable Respondent Court of Appeals erred in the decision of the Regional Trial
Court convicting the petitioner of the offense charged, despite the cold fact that the
 basis of the conviction was based solely on the stipulation of facts made during the pre-
trial on August 8, 1985, which was not signed by the petitioner, nor by his counsel.

Finding the petition meritorious, we resolved to give due course.

The 1985 Rules on Criminal Procedure, which became effective on January 1, 1985, applicable to
this case since the pre-trial was held on August 8, 1985, provides:

SEC. 4. Pre-trial agreements must be signed. — No agreement or admission made or

entered during the pre-trial conference shall be used in evidence against the accused
unless reduced to writing and signed by him and his counsel. (Rule 118) [Emphasis
supplied]

By its very language, the Rule is mandatory. Under the rule of statutory construction, negative words
and phrases are to be regarded as mandatory while those in the affirmative are merely directory
(McGee vs. Republic, 94 Phil. 820 [1954]). The use of the term "shall" further emphasizes its
mandatory character and means that it is imperative, operating to impose a duty which may be
enforced (Bersabal vs. Salvador, No. L-35910, July 21, 1978, 84 SCRA 176). And more importantly,
penal statutes whether substantive and remedial or procedural are, by consecrated rule, to be strictly
applied against the government and liberally in favor of the accused (People vs. Terrado No. L-
23625, November 25, 1983, 125 SCRA 648).

The conclusion is inevitable, therefore, that the omission of the signature of the accused and his
counsel, as mandatorily required by the Rules, renders the Stipulation of Facts inadmissible in
evidence. The fact that the lawyer of the accused, in his memorandum, confirmed the Stipulation of
Facts does not cure the defect because Rule 118 requires both the accused and his counsel to sign
the Stipulation of Facts. What the prosecution should have done, upon discovering that the accused
did not sign the Stipulation of Facts, as required by Rule 118, was to submit evidence to establish the
elements of the crime, instead of relying solely on the supposed admission of the accused in the
Stipulation of Facts. Without said evidence independent of the admission, the guilt of the accused
cannot be deemed established beyond reasonable doubt.

Consequently, under the circumstances obtaining in this case, the ends of justice require that
evidence be presented to determine the culpability of the accused. When a judgment has been
entered by consent of an attorney without special authority, it will sometimes be set aside or
reopened (Natividad vs. Natividad, 51 Phil. 613 [1928]).

WHEREFORE, the judgment of respondent Appellate Court is REVERSED and this case is hereby
ordered RE-OPENED and REMANDED to the appropriate Branch of the Regional Trial Court of
Lucena City, for further reception of evidence.

SO ORDERED.
G.R. No. L-35910 July 21, 1978

PURITA BERSABAL, petitioner,
vs.
HONORABLE JUDGE SERAFIN SALVADOR, as Judge of the Court of First Instance of
Caloocan City, Branch XIV, TAN THAT and ONG PIN TEE, respondents.

MAKASIAR, J.:

On March 23, 1972, petitioner Purita Bersabal seeks to annul the orders of respondent Judge of
August 4, 1971, October 30, 1971 and March 15, 1972 and to compel said respondent Judge to
decide petitioner's perfected appeal on the basis of the evidence and records of the case submitted
by the City Court of Caloocan City plus the memorandum already submitted by the petitioner and
respondents.

Since only questions of law were raised therein, the Court of Appeals, on October 13, 1972, issued a
resolution certifying said case to this Court pursuant to Section 17, paragraph (4) of the Judiciary Act
of 1948, as amended.

As found by the Court of Appeals, the facts of this case are as follows:

It appears that private respondents Tan That and Ong Pin Tee filed an ejectment suit,
docketed as Civil Case No. 6926 in the City Court of Caloocan City, against the
petitioner. A decision was rendered by said Court on November 25, 1970, which
decision was appealed by the petitioner to the respondent Court and docketed therein
as Civil Case No. C-2036.

During the pendency of the appeal the respondent court issued on March 23, 1971 an
order which reads:

Pursuant to the provisions of Rep. Act No. 6031, the Clerk of Court of
Caloocan City, is hereby directed to transmit to this Court within fifteen
(15) days from receipt hereof the transcripts of stenographic notes taken
down during the hearing of this case before the City Court of Caloocan
City, and likewise, counsels for both parties are given thirty (30) days from
receipt of this order within which to file their respective memoranda, and
thereafter, this case shall be deemed submitted for decision by this Court.

which order was apparently received by petitioner on April 17, 1971.

The transcript of stenographic notes not having yet been forwarded to the respondent
court, petitioner filed on May 5, 1971 a 'MOTION EX-PARTE TO SUBMIT
MEMORANDUM WITHIN 30 DAYS FROM RECEIPT OF NOTICE OF SUBMISSION
OF THE TRANSCRIPT OF STENOGRAPHIC NOTES TAKEN DURING THE HEARING
OF THE CASE BEFORE THE CITY COURT OF CALOOCAN CITY' which was granted
by respondent court on May 7, 1971. However, before the petitioner could receive any
such notice from the respondent court, the respondent Judge issued an order on August
4, 1971 which says:
 For failure of the defendant-appellant to prosecute her appeal the same is
hereby ordered DISMISSED with costs against her.

Petitioner filed a motion for reconsideration of the order on September 28, 1971, citing
as a ground the granting of his ex-parte motion to submit memorandum within 30 days
from notice of the submission of the stenographic notes taken before the City Court.
Private respondents filed their opposition to the motion on September 30,1971. In the
meantime, on October 20,1971, petitioner filed her memorandum dated October 18,
1971. On October 30, 1971 the respondent Court denied the motion for reconsideration.
Then on January 25, 1972, petitioner filed a motion for leave to file second motion for
reconsideration which was likewise denied by the respondent court on March 15, 1972.
Hence this petition.

The sole inquiry in the case at bar can be stated thus: Whether, in the light of the provisions of the
second paragraph of Section 45 of Republic Act No. 296, as amended by R.A. No. 6031, the mere
failure of an appellant to submit on nine the memorandum mentioned in the same paragraph would
empower the Court of First Instance to dismiss the appeal on the ground of failure to Prosecute; or,
whether it is mandatory upon said Court to proceed to decide the appealed case on the basis of the
evidence and records transmitted to it, the failure of the appellant to submit a memorandum on time
notwithstanding.

The second paragraph of Section 45 of R.A. No. 296, otherwise known as the Philippine Judiciary Act
of 1948, as amended by R.A. No. 6031 provides, in part, as follows:

Courts of First Instance shall decide such appealed cases on the basis of the evidence
and records transmitted from the city or municipal courts: Provided, That the
parties may submit memoranda and/or brief with oral argument if so requested ... .
(Emphasis supplied).

The foregoing provision is clear and leaves no room for doubt. It cannot be interpreted otherwise than
that the submission of memoranda is optional on the part of the parties. Being optional on the part of
the parties, the latter may so choose to waive submission of the memoranda. And as a logical
concomitant of the choice given to the Parties, the Court cannot dismiss the appeal of the party
waiving the submission of said memorandum the appellant so chooses not to submit the
memorandum, the Court of First Instance is left with no alternative but to decide the case on the basis
of the evidence and records transmitted from the city or municipal courts. In other words, the Court is
not empowered by law to dismiss the appeal on the mere failure of an appellant to submit his
memorandum, but rather it is the Court's mandatory duty to decide the case on the basis of the
available evidence and records transmitted to it.

As a general rule, the word "may" when used in a statute is permissive only and operates to confer
discretion; while the word "shall" is imperative, operating to impose a duty which may be enforced
(Dizon vs. Encarnacion, L-18615, Dec. 24, 1963, 9 SCRA 714, 716-717). The implication is that the
Court is left with no choice but to decide the appealed case either on the basis of the evidence and
records transmitted to it, or on the basis of the latter plus memoranda and/or brief with oral argument
duly submitted and/or made on request.

Moreover, memoranda, briefs and oral arguments are not essential requirements. They may be
submitted and/or made only if so requested.

Finally, a contrary interpretation would be unjust and dangerous as it may defeat the litigant's right to
appeal granted to him by law. In the case of Republic vs. Rodriguez
(L-26056, May 29, 1969, 28 SCRA 378) this Court underscored "the need of proceeding with caution
so that a party may not be deprived of its right to appeal except for weighty reasons." Courts should
heed the rule in Municipality of Tiwi, Albay vs. Cirujales
(L-37520, Dec. 26, 1973, 54 SCRA 390, 395), thus:

The appellate court's summary dismissal of the appeal even before receipt of the
records of the appealed case as ordered by it in a prior mandamus case must be set
aside as having been issued precipitously and without an opportunity to consider and
appreciate unavoidable circumstances of record not attributable to petitioners that
caused the delay in the elevation of the records of the case on appeal.

In the instant case, no notice was received by petitioner about the submission of the transcript of the
stenographic notes, so that his 30-day period to submit his memorandum would commence to run.
Only after the expiration of such period can the respondent Judge act on the case by deciding it on
the merits, not by dismissing the appeal of petitioner.

WHEREFORE, THE CHALLENGED ORDERS OF RESPONDENT JUDGE DATED AUGUST 4,

1971, OCTOBER 30, 1971 AND MARCH 15, 1971 ARE HEREBY SET ASIDE AS NULL AND VOID
AND THE RESPONDENT COURT IS HEREBY DIRECTED TO DECIDE CIVIL CASE NO. C-2036
ON THE MERITS. NO COSTS.
G.R. No. 167982             August 13, 2008

OFFICE OF THE OMBUDSMAN, petitioner,

vs.
MERCEDITAS DE SAHAGUN, MANUELA T. WAQUIZ and RAIDIS J. BASSIG, respondent.*

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing
the Decision1 dated April 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 78008 which set
aside the Orders dated March 10, 2003 and June 24, 2003 of the petitioner Office of
the Ombudsman in OMB-ADM-0-00-0721.

The material antecedents are as follows:

On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and Publications Division
of the Intramuros Administration, submitted a Memorandum to then Intramuros Administrator Edda V.
Henson (Henson) recommending that Brand Asia, Ltd. be commissioned to produce a video
documentary for a television program, as well implement a media plan and marketing support
services for Intramuros.

On November 17, 1992, the Bids and Awards Committee (BAC) of the Intramuros Administration,
composed of respondent Merceditas de Sahagun, as Chairman, with respondent Manuela T. Waquiz
and Dominador C. Ferrer, Jr. (Ferrer), as members, submitted a recommendation to Henson for the
approval of the award of said contract to Brand Asia, Ltd. On the same day, Henson approved the
recommendation and issued a Notice of Award to Brand Asia, Ltd.

On November 23, 1992, a contract of service to produce a video documentary on Intramuros for TV
program airing was executed between Henson and Brand Asia, Ltd. On December 1, 1992, a Notice
to Proceed was issued to Brand Asia, Ltd.

On June 2, 1993, the BAC, with Augusto P. Rustia (Rustia) as additional member, recommended to
Henson the approval of the award of contract for print collaterals to Brand Asia, Ltd. On the same
day, Henson approved the recommendation and issued a Notice of Award/Notice to Proceed to
Brand Asia, Ltd.

On June 22, 1993, a contract of services to produce print collaterals was entered between Henson
and Brand Asia, Ltd.

On March 7, 1995, an anonymous complaint was filed with the Presidential Commission Against Graft
and Corruption (PGAC) against Henson in relation to the contracts entered into with Brand Asia, Ltd.

On November 30, 1995, Henson was dismissed from the service by the Office of the President upon
recommendation of the PGAC which found that the contracts were entered into without the required
public bidding and in violation of Section 3 (a) and (e) of Republic Act (R.A.) No. 3019, or the Anti-
Graft and Corrupt Practices Act.
On August 8, 1996, an anonymous complaint was filed with the Ombudsman against the BAC in
relation to the latter’s participation in the contracts with Brand Asia, Ltd. for which Henson was
dismissed from service.

On September 5, 2000, Fact-Finding Intelligence Bureau (FFIB) filed criminal and administrative
charges against respondents, along with Ferrer and Rustia, for violation of Section 3 (a) and (c) of
R.A. No. 3019 in relation to Section 1 of Executive Order No. 302 and grave misconduct, conduct
grossly prejudicial to the best interest of the service and gross violation of Rules and Regulations
pursuant to the Administrative Code of 1987, docketed as OMB-0-00-1411 and OMB-ADM-0-00-
0721, respectively.2 OMB-0-00-1411 was dismissed on February 27, 2002 for lack of probable
cause.3

In his proposed Decision4 dated June 19, 2002, Graft Investigation Officer II Joselito P. Fangon
recommended the dismissal of OMB-ADM-0-00-0721.

However, then Ombudsman Simeon V. Marcelo disapproved the recommendation. In an

Order5 dated March 10, 2003, he held that there was substantial evidence to hold respondents
administratively liable since the contracts awarded to Brand Asia, Ltd. failed to go through the
required procedure for public bidding under Executive Order No. 301 dated July 26, 1987.
Respondents and Ferrer were found guilty of grave misconduct and dismissed from service. Rustia
was found guilty of simple misconduct and suspended for six months without pay.

On March 17, 2003, respondents, along with Rustia, filed a Motion for Reconsideration.6

On June 24, 2003, Ombudsman Marcelo issued an Order7 partially granting the motion for

reconsideration. Respondents and Ferrer were found guilty of the lesser offense of simple misconduct
and suspended for six months without pay. Rustia's suspension was reduced to three months.

Dissatisfied, respondents filed a Petition for Review8 with the CA assailing the Orders dated March
10, 2003 and June 24, 2003 of the Ombudsman.

On April 28, 2005, the CA rendered a Decision9 setting aside the Orders dated March 10, 2003 and
June 24, 2003 of the Ombudsman. The CA held that respondents may no longer be prosecuted since
the complaint was filed more than seven years after the imputed acts were committed which was
beyond the one year period provided for by Section 20 (5) of Republic Act (R.A.) No. 6770, otherwise
known as "The Ombudsman Act of 1989"; and that the nature of the function of the Ombudsman was
purely recommendatory and it did not have the power to penalize erring government officials and
employees. The CA relied on the following statement made by the Court in Tapiador v. Office of the
Ombudsman,10 to wit:

x x x Besides, assuming arguendo, that petitioner [Tapiador] was administratively liable, the

Ombudsman has no authority to directly dismiss the petitioner from the government
service, more particularly from his position in the BID. Under Section 13, subparagraph 3, of
Article XI of the 1987 Constitution, the Ombudsman can only "recommend" the removal of
the public official or employee found to be at fault, to the public official
concerned.11 (Emphasis supplied)

Hence, the present petition raising the following issues (1) whether Section 20 (5) of R.A. No. 6770
prohibits administrative investigations in cases filed more than one year after commission, and (2)
whether the Ombudsman only has recommendatory, not punitive, powers against erring government
officials and employees.
The Court rules in favor of the petitioner.

The issues in the present case are settled by precedents.

On the first issue, well-entrenched is the rule that administrative offenses do not
prescribe.12 Administrative offenses by their very nature pertain to the character of public officers and
employees. In disciplining public officers and employees, the object sought is not the punishment of
the officer or employee but the improvement of the public service and the preservation of the public’s
faith and confidence in our government.13

Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:

SEC. 20. Exceptions. – The Office of the Ombudsman may not conduct the necessary

investigation of any administrative act or omission complained of if it believes that:

xxx

(5) The complaint was filed after one year from the occurrence of the act or omission
complained of. (Emphasis supplied)

proscribes the investigation of any administrative act or omission if the complaint was filed after one
year from the occurrence of the complained act or omission.

In Melchor v. Gironella,14  the Court held that the period stated in Section 20(5) of R.A. No. 6770 does
not refer to the prescription of the offense but to the discretion given to the Ombudsman on whether it
would investigate a particular administrative offense. The use of the word "may" in the provision is
construed as permissive and operating to confer discretion.15 Where the words of a statute are clear,
plain and free from ambiguity, they must be given their literal meaning and applied without attempted
interpretation.16

In Filipino v. Macabuhay,17 the Court interpreted Section 20 (5) of R.A. No. 6770 in this manner:

Petitioner argues that based on the abovementioned provision [Section 20(5) of RA 6770)],
respondent's complaint is barred by prescription considering that it was filed more than one
year after the alleged commission of the acts complained of.

Petitioner's argument is without merit.

The use of the word "may" clearly shows that it is directory in nature and not mandatory as
petitioner contends. When used in a statute, it is permissive only and operates to confer
discretion; while the word "shall" is imperative, operating to impose a duty which may be
enforced. Applying Section 20(5), therefore, it is discretionary upon the Ombudsman
whether or not to conduct an investigation on a complaint even if it was filed after one
year from the occurrence of the act or omission complained of. In fine, the complaint is
not barred by prescription.18 (Emphasis supplied)

The declaration of the CA in its assailed decision that while as a general rule the word "may" is
directory, the negative phrase "may not" is mandatory in tenor; that a directory word, when qualified
by the word "not," becomes prohibitory and therefore becomes mandatory in character, is not
plausible. It is not supported by jurisprudence on statutory construction.
As the Court recently held in Office of the Ombudsman v. Court of Appeals,19 Section 20 of R.A. No.
6770 has been clarified by Administrative Order No. 17,20 which amended Administrative Order No.
07, otherwise known as the Rules of Procedure of the Office of the Ombudsman. Section 4, Rule
III21 of the amended Rules of Procedure of the Office of the Ombudsman reads:

Section 4. Evaluation. - Upon receipt of the complaint, the same shall be evaluated to

determine whether the same may be:

a) dismissed outright for any grounds stated under Section 20 of Republic Act No. 6770,
provided, however, that the dismissal thereof is not mandatory and shall be
discretionary on the part of the Ombudsman or the Deputy Ombudsman concerned;

b) treated as a grievance/request for assistance which may be referred to the Public

Assistance Bureau, this Office, for appropriate action under Section 2, Rule IV of this Rules;

c) referred to other disciplinary authorities under paragraph 2, Section 23, R.A. 6770 for the
taking of appropriate administrative proceedings;

d) referred to the appropriate office/agency or official for the conduct of further fact-finding
investigation; or

e) docketed as an administrative case for the purpose of administrative adjudication by the

Office of the Ombudsman. (Emphasis supplied)

It is, therefore, discretionary upon the Ombudsman whether or not to conduct an investigation of a

complaint even if it was filed after one year from the occurrence of the act or omission complained of.

Thus, while the complaint herein was filed only on September 5, 2000, or more than seven years after
the commission of the acts imputed against respondents in November 1992 and June 1993, it was
within the authority of the Ombudsman to conduct the investigation of the subject complaint.

On the second issue, the authority of the Ombudsman to determine the administrative liability of a
public official or employee, and to direct and compel the head of the office or agency concerned to
implement the penalty imposed is likewise settled.

In Ledesma v. Court of Appeals,22 the Court has ruled that the statement in Tapiador that made
reference to the power of the Ombudsman to impose an administrative penalty was merely an obiter
dictum and could not be cited as a doctrinal declaration of this Court, thus:

x x x [A] cursory reading of Tapiador reveals that the main point of the case was the failure of
the complainant therein to present substantial evidence to prove the charges of the
administrative case. The statement that made reference to the power of the Ombudsman
is, at best, merely an obiter dictum and, as it is unsupported by sufficient explanation, is
susceptible to varying interpretations, as what precisely is before us in this case. Hence, it
cannot be cited as a doctrinal declaration of this Court nor is it safe from judicial
examination.23 (Emphasis supplied)

In Estarija v. Ranada,24 the Court reiterated its pronouncements in Ledesma and categorically stated:

x x x [T]he Constitution does not restrict the powers of the Ombudsman in Section 13, Article
XI of the 1987 Constitution, but allows the Legislature to enact a law that would spell out the
 powers of the Ombudsman. Through the enactment of Rep. Act No. 6770, specifically Section
15, par. 3, the lawmakers gave the Ombudsman such powers to sanction erring officials and
employees, except members of Congress, and the Judiciary. To conclude, we hold that
Sections 15, 21, 22 and 25 of Republic Act No. 6770 are constitutionally sound. The powers
of the Ombudsman are not merely recommendatory. His office was given teeth to render
this constitutional body not merely functional but also effective. Thus, we hold that under
Republic Act No. 6770 and the 1987 Constitution, the Ombudsman has the
constitutional power to directly remove from government service an erring public
official other than a member of Congress and the Judiciary.25 (Emphasis supplied)

The power of the Ombudsman to directly impose administrative sanctions has been repeatedly
reiterated in the subsequent cases of Barillo v. Gervasio,26  Office of the Ombudsman v.
Madriaga,27  Office of the Ombudsman v. Court of Appeals,28  Balbastro v. Junio,29 Commission on
Audit, Regional Office No. 13, Butuan City v. Hinampas,30 Office of the Ombudsman v.
Santiago,31 Office of the Ombudsman v. Lisondra,32 and most recently in Deputy Ombudsman for the
Visayas v. Abugan33 and continues to be the controlling doctrine.

In fine, it is already well-settled that the Ombudsman's power as regards the administrative penalty to

be imposed on an erring public officer or employee is not merely recommendatory.
The Ombudsman has the power to directly impose the penalty of removal, suspension, demotion,
fine, censure, or prosecution of a public officer or employee, other than a member of Congress and
the Judiciary, found to be at fault, within the exercise of its administrative disciplinary authority as
provided in the Constitution, R.A. No. 6770, as well as jurisprudence. This power gives the said
constitutional office teeth to render it not merely functional, but also effective.34

Thus, the CA committed a reversible error in holding that the case had already prescribed and that
the Ombudsman does not have the power to penalize erring government officials and employees.

WHEREFORE, the petition is GRANTED. The Decision dated April 28, 2005 of the Court of Appeals
in CA-G.R. SP No. 78008 is REVERSED and SET ASIDE. The Order dated June 24, 2003 of the
Office of the Ombudsman is REINSTATED.

SO ORDERED.
G.R. No. 117188 August 7, 1997

LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION, INC., petitioner,

vs.
HON. COURT OF APPEALS, HOME INSURANCE AND GUARANTY CORPORATION, EMDEN
ENCARNACION and HORATIO AYCARDO, respondents.

ROMERO, J.:

May the failure of a corporation to file its by-laws within one month from the date of its incorporation,
as mandated by Section 46 of the Corporation Code, result in its automatic dissolution?

This is the issue raised in this petition for review on certiorari of the Decision1 of the Court of Appeals
affirming the decision of the Home Insurance and Guaranty Corporation (HIGC). This quasi-judicial
body recognized Loyola Grand Villas Homeowners Association (LGVHA) as the sole homeowners'
association in Loyola Grand Villas, a duly registered subdivision in Quezon City and Marikina City that
was owned and developed by Solid Homes, Inc. It revoked the certificates of registration issued to
Loyola Grand Villas homeowners (North) Association Incorporated (the North Association for brevity)
and Loyola Grand Villas Homeowners (South) Association Incorporated (the South Association).

LGVHAI was organized on February 8, 1983 as the association of homeowners and residents of the
Loyola Grand Villas. It was registered with the Home Financing Corporation, the predecessor of
herein respondent HIGC, as the sole homeowners' organization in the said subdivision under
Certificate of Registration No. 04-197. It was organized by the developer of the subdivision and its
first president was Victorio V. Soliven, himself the owner of the developer. For unknown reasons,
however, LGVHAI did not file its corporate by-laws.

Sometime in 1988, the officers of the LGVHAI tried to register its by-laws. They failed to do so. 2 To
the officers' consternation, they discovered that there were two other organizations within the
subdivision — the North Association and the South Association. According to private respondents, a
non-resident and Soliven himself, respectively headed these associations. They also discovered that
these associations had five (5) registered homeowners each who were also the incorporators,
directors and officers thereof. None of the members of the LGVHAI was listed as member of the
North Association while three (3) members of LGVHAI were listed as members of the South
Association.3 The North Association was registered with the HIGC on February 13, 1989 under
Certificate of Registration No. 04-1160 covering Phases West II, East III, West III and East IV. It
submitted its by-laws on December 20, 1988.

In July, 1989, when Soliven inquired about the status of LGVHAI, Atty. Joaquin A. Bautista, the head
of the legal department of the HIGC, informed him that LGVHAI had been automatically dissolved for
two reasons. First, it did not submit its by-laws within the period required by the Corporation Code
and, second, there was non-user of corporate charter because HIGC had not received any report on
the association's activities. Apparently, this information resulted in the registration of the South
Association with the HIGC on July 27, 1989 covering Phases West I, East I and East II. It filed its by-
laws on July 26, 1989.

These developments prompted the officers of the LGVHAI to lodge a complaint with the HIGC. They
questioned the revocation of LGVHAI's certificate of registration without due notice and hearing and
concomitantly prayed for the cancellation of the certificates of registration of the North and South
Associations by reason of the earlier issuance of a certificate of registration in favor of LGVHAI.
On January 26, 1993, after due notice and hearing, private respondents obtained a favorable ruling
from HIGC Hearing Officer Danilo C. Javier who disposed of HIGC Case No. RRM-5-89 as follows:

WHEREFORE, judgment is hereby rendered recognizing the Loyola Grand Villas Homeowners
Association, Inc., under Certificate of Registration No. 04-197 as the duly registered and
existing homeowners association for Loyola Grand Villas homeowners, and declaring the
Certificates of Registration of Loyola Grand Villas Homeowners (North) Association, Inc. and
Loyola Grand Villas Homeowners (South) Association, Inc. as hereby revoked or cancelled;
that the receivership be terminated and the Receiver is hereby ordered to render an
accounting and turn-over to Loyola Grand Villas Homeowners Association, Inc., all assets and
records of the Association now under his custody and possession.

The South Association appealed to the Appeals Board of the HIGC. In its Resolution of September 8,
1993, the Board 4 dismissed the appeal for lack of merit.

Rebuffed, the South Association in turn appealed to the Court of Appeals, raising two issues. First,
whether or not LGVHAI's failure to file its by-laws within the period prescribed by Section 46 of the
Corporation Code resulted in the automatic dissolution of LGVHAI. Second, whether or not two
homeowners' associations may be authorized by the HIGC in one "sprawling subdivision." However,
in the Decision of August 23, 1994 being assailed here, the Court of Appeals affirmed the Resolution
of the HIGC Appeals Board.

In resolving the first issue, the Court of Appeals held that under the Corporation Code, a private
corporation commences to have corporate existence and juridical personality from the date the
Securities and Exchange Commission (SEC) issues a certificate of incorporation under its official
seal. The requirement for the filing of by-laws under Section 46 of the Corporation Code within one
month from official notice of the issuance of the certificate of incorporation presupposes that it is
already incorporated, although it may file its by-laws with its articles of incorporation. Elucidating on
the effect of a delayed filing of by-laws, the Court of Appeals said:

We also find nothing in the provisions cited by the petitioner, i.e., Section 46 and 22,
Corporation Code, or in any other provision of the Code and other laws which provide or at
least imply that failure to file the by-laws results in an automatic dissolution of the corporation.
While Section 46, in prescribing that by-laws must be adopted within the period prescribed
therein, may be interpreted as a mandatory provision, particularly because of the use of the
word "must," its meaning cannot be stretched to support the argument that automatic
dissolution results from non-compliance.

We realize that Section 46 or other provisions of the Corporation Code are silent on the result
of the failure to adopt and file the by-laws within the required period. Thus, Section 46 and
other related provisions of the Corporation Code are to be construed with Section 6 (1) of P.D.
902-A. This section empowers the SEC to suspend or revoke certificates of registration on the
grounds listed therein. Among the grounds stated is the failure to file by-laws (see also II
Campos: The Corporation Code, 1990 ed., pp. 124-125). Such suspension or revocation, the
same section provides, should be made upon proper notice and hearing. Although P.D. 902-A
refers to the SEC, the same principles and procedures apply to the public respondent HIGC as
it exercises its power to revoke or suspend the certificates of registration or homeowners
association. (Section 2 [a], E.O. 535, series 1979, transferred the powers and authorities of the
SEC over homeowners associations to the HIGC.)

We also do not agree with the petitioner's interpretation that Section 46, Corporation Code
prevails over Section 6, P.D. 902-A and that the latter is invalid because it contravenes the
 former. There is no basis for such interpretation considering that these two provisions are not
inconsistent with each other. They are, in fact, complementary to each other so that one
cannot be considered as invalidating the other.

The Court of Appeals added that, as there was no showing that the registration of LGVHAI had been
validly revoked, it continued to be the duly registered homeowners' association in the Loyola Grand
Villas. More importantly, the South Association did not dispute the fact that LGVHAI had been
organized and that, thereafter, it transacted business within the period prescribed by law.

On the second issue, the Court of Appeals reiterated its previous ruling 5 that the HIGC has the
authority to order the holding of a referendum to determine which of two contending associations
should represent the entire community, village or subdivision.

Undaunted, the South Association filed the instant petition for review on certiorari. It elevates as sole
issue for resolution the first issue it had raised before the Court of Appeals, i.e., whether or not the
LGVHAI's failure to file its by-laws within the period prescribed by Section 46 of the Corporation Code
had the effect of automatically dissolving the said corporation.

Petitioner contends that, since Section 46 uses the word "must" with respect to the filing of by-laws,
noncompliance therewith would result in "self-extinction" either due to non-occurrence of a
suspensive condition or the occurrence of a resolutory condition "under the hypothesis that (by) the
issuance of the certificate of registration alone the corporate personality is deemed already formed." It
asserts that the Corporation Code provides for a "gradation of violations of requirements." Hence,
Section 22 mandates that the corporation must be formally organized and should commence
transaction within two years from date of incorporation. Otherwise, the corporation would be deemed
dissolved. On the other hand, if the corporation commences operations but becomes continuously
inoperative for five years, then it may be suspended or its corporate franchise revoked.

Petitioner concedes that Section 46 and the other provisions of the Corporation Code do not provide
for sanctions for non-filing of the by-laws. However, it insists that no sanction need be provided
"because the mandatory nature of the provision is so clear that there can be no doubt about its being
an essential attribute of corporate birth." To petitioner, its submission is buttressed by the facts that
the period for compliance is "spelled out distinctly;" that the certification of the SEC/HIGC must show
that the by-laws are not inconsistent with the Code, and that a copy of the by-laws "has to be
attached to the articles of incorporation." Moreover, no sanction is provided for because "in the first
place, no corporate identity has been completed." Petitioner asserts that "non-provision for remedy or
sanction is itself the tacit proclamation that non-compliance is fatal and no corporate existence had
yet evolved," and therefore, there was "no need to proclaim its demise." 6 In a bid to convince the
Court of its arguments, petitioner stresses that:

. . . the word MUST is used in Sec. 46 in its universal literal meaning and corollary human
implication — its compulsion is integrated in its very essence — MUST is always enforceable
by the inevitable consequence — that is, "OR ELSE". The use of the word MUST in Sec. 46 is
no exception — it means file the by-laws within one month after notice of issuance of certificate
of registration OR ELSE. The OR ELSE, though not specified, is inextricably a part of MUST .
Do this or if you do not you are "Kaput". The importance of the by-laws to corporate existence
compels such meaning for as decreed the by-laws is "the government" of the corporation.
Indeed, how can the corporation do any lawful act as such without by-laws. Surely, no law is
indeed to create chaos. 7

Petitioner asserts that P.D. No. 902-A cannot exceed the scope and power of the Corporation Code
which itself does not provide sanctions for non-filing of by-laws. For the petitioner, it is "not proper to
assess the true meaning of Sec. 46 . . . on an unauthorized provision on such matter contained in the
said decree."

In their comment on the petition, private respondents counter that the requirement of adoption of by-
laws is not mandatory. They point to P.D. No. 902-A as having resolved the issue of whether said
requirement is mandatory or merely directory. Citing Chung Ka Bio v. Intermediate Appellate
Court, 8 private respondents contend that Section 6(I) of that decree provides that non-filing of by-
laws is only a ground for suspension or revocation of the certificate of registration of corporations and,
therefore, it may not result in automatic dissolution of the corporation. Moreover, the adoption and
filing of by-laws is a condition subsequent which does not affect the corporate personality of a
corporation like the LGVHAI. This is so because Section 9 of the Corporation Code provides that the
corporate existence and juridical personality of a corporation begins from the date the SEC issues a
certificate of incorporation under its official seal. Consequently, even if the by-laws have not yet been
filed, a corporation may be considered a de facto corporation. To emphasize the fact the LGVHAI was
registered as the sole homeowners' association in the Loyola Grand Villas, private respondents point
out that membership in the LGVHAI was an "unconditional restriction in the deeds of sale signed by
lot buyers."

In its reply to private respondents' comment on the petition, petitioner reiterates its argument that the
word " must" in Section 46 of the Corporation Code is mandatory. It adds that, before the ruling
in Chung Ka Bio v. Intermediate Appellate Court could be applied to this case, this Court must first
resolve the issue of whether or not the provisions of P.D. No. 902-A prescribing the rules and
regulations to implement the Corporation Code can "rise above and change" the substantive
provisions of the Code.

The pertinent provision of the Corporation Code that is the focal point of controversy in this case
states:

Sec. 46. Adoption of by-laws. — Every corporation formed under this Code, must within one
(1) month after receipt of official notice of the issuance of its certificate of incorporation by the
Securities and Exchange Commission, adopt a code of by-laws for its government not
inconsistent with this Code. For the adoption of by-laws by the corporation, the affirmative vote
of the stockholders representing at least a majority of the outstanding capital stock, or of at
least a majority of the members, in the case of non-stock corporations, shall be necessary. The
by-laws shall be signed by the stockholders or members voting for them and shall be kept in
the principal office of the corporation, subject to the stockholders or members voting for them
and shall be kept in the principal office of the corporation, subject to inspection of the
stockholders or members during office hours; and a copy thereof, shall be filed with the
Securities and Exchange Commission which shall be attached to the original articles of
incorporation.

Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted and filed
prior to incorporation; in such case, such by-laws shall be approved and signed by all the
incorporators and submitted to the Securities and Exchange Commission, together with the
articles of incorporation.

In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange
Commission of a certification that the by-laws are not inconsistent with this Code.

The Securities and Exchange Commission shall not accept for filing the by-laws or any
amendment thereto of any bank, banking institution, building and loan association, trust
company, insurance company, public utility, educational institution or other special
 corporations governed by special laws, unless accompanied by a certificate of the appropriate
government agency to the effect that such by-laws or amendments are in accordance with law.

As correctly postulated by the petitioner, interpretation of this provision of law begins with the
determination of the meaning and import of the word "must" in this section Ordinarily, the word "must"
connotes an imperative act or operates to impose a duty which may be enforced. 9 It is synonymous
with "ought" which connotes compulsion or mandatoriness. 10 However, the word "must" in a statute,
like "shall," is not always imperative. It may be consistent with an exercise of discretion. In this
jurisdiction, the tendency has been to interpret "shall" as the context or a reasonable construction of
the statute in which it is used demands or requires. 11 This is equally true as regards the word "must."
Thus, if the languages of a statute considered as a whole and with due regard to its nature and object
reveals that the legislature intended to use the words "shall" and "must" to be directory, they should
be given that meaning.12

In this respect, the following portions of the deliberations of the Batasang Pambansa No. 68 are
illuminating:

MR. FUENTEBELLA. Thank you, Mr. Speaker.

On page 34, referring to the adoption of by-laws, are we made to understand here, Mr.
Speaker, that by-laws must immediately be filed within one month after the issuance? In other
words, would this be mandatory or directory in character?

MR. MENDOZA. This is mandatory.

MR. FUENTEBELLA. It being mandatory, Mr. Speaker, what would be the effect of the failure
of the corporation to file these by-laws within one month?

MR. MENDOZA. There is a provision in the latter part of the Code which identifies and
describes the consequences of violations of any provision of this Code. One such
consequences is the dissolution of the corporation for its inability, or perhaps, incurring certain
penalties.

MR. FUENTEBELLA. But it will not automatically amount to a dissolution of the corporation by
merely failing to file the by-laws within one month. Supposing the corporation was late, say,
five days, what would be the mandatory penalty?

MR. MENDOZA. I do not think it will necessarily result in the automatic or ipso facto dissolution
of the corporation. Perhaps, as in the case, as you suggested, in the case of El Hogar Filipino
where a quo warranto action is brought, one takes into account the gravity of the violation
committed. If the by-laws were late — the filing of the by-laws were late by, perhaps, a day or
two, I would suppose that might be a tolerable delay, but if they are delayed over a period of
months — as is happening now — because of the absence of a clear requirement that by-laws
must be completed within a specified period of time, the corporation must suffer certain
consequences. 13

This exchange of views demonstrates clearly that automatic corporate dissolution for failure to file the
by-laws on time was never the intention of the legislature. Moreover, even without resorting to the
records of deliberations of the Batasang Pambansa, the law itself provides the answer to the issue
propounded by petitioner.
Taken as a whole and under the principle that the best interpreter of a statute is the statute itself
(optima statuli interpretatix est ipsum statutum), 14 Section 46 aforequoted reveals the legislative
intent to attach a directory, and not mandatory, meaning for the word "must" in the first sentence
thereof. Note should be taken of the second paragraph of the law which allows the filing of the by-
laws even prior to incorporation. This provision in the same section of the Code rules out mandatory
compliance with the requirement of filing the by-laws "within one (1) month after receipt of official
notice of the issuance of its certificate of incorporation by the Securities and Exchange Commission."
It necessarily follows that failure to file the by-laws within that period does not imply the "demise" of
the corporation. By-laws may be necessary for the "government" of the corporation but these are
subordinate to the articles of incorporation as well as to the Corporation Code and related
statutes.15 There are in fact cases where by-laws are unnecessary to corporate existence or to the
valid exercise of corporate powers, thus:

In the absence of charter or statutory provisions to the contrary, by-laws are not necessary
either to the existence of a corporation or to the valid exercise of the powers conferred upon it,
certainly in all cases where the charter sufficiently provides for the government of the body;
and even where the governing statute in express terms confers upon the corporation the
power to adopt by-laws, the failure to exercise the power will be ascribed to mere nonaction
which will not render void any acts of the corporation which would otherwise be
valid.  16 (Emphasis supplied.)

As Fletcher aptly puts it:

It has been said that the by-laws of a corporation are the rule of its life, and that until by-laws
have been adopted the corporation may not be able to act for the purposes of its creation, and
that the first and most important duty of the members is to adopt them. This would seem to
follow as a matter of principle from the office and functions of by-laws. Viewed in this light, the
adoption of by-laws is a matter of practical, if not one of legal, necessity. Moreover, the
peculiar circumstances attending the formation of a corporation may impose the obligation to
adopt certain by-laws, as in the case of a close corporation organized for specific purposes.
And the statute or general laws from which the corporation derives its corporate existence may
expressly require it to make and adopt by-laws and specify to some extent what they shall
contain and the manner of their adoption. The mere fact, however, of the existence of power in
the corporation to adopt by-laws does not ordinarily and of necessity make the exercise of
such power essential to its corporate life, or to the validity of any of its acts.  17

Although the Corporation Code requires the filing of by-laws, it does not expressly provide for the
consequences of the non-filing of the same within the period provided for in Section 46. However,
such omission has been rectified by Presidential Decree No. 902-A, the pertinent provisions on the
jurisdiction of the SEC of which state:

Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the
following powers:

xxx xxx xxx

(1) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of
registration of corporations, partnerships or associations, upon any of the grounds provided by
law, including the following:

xxx xxx xxx

 5. Failure to file by-laws within the required period;

xxx xxx xxx

In the exercise of the foregoing authority and jurisdiction of the Commission or by a

Commissioner or by such other bodies, boards, committees and/or any officer as may be
created or designated by the Commission for the purpose. The decision, ruling or order of any
such Commissioner, bodies, boards, committees and/or officer may be appealed to the
Commission sitting en banc within thirty (30) days after receipt by the appellant of notice of
such decision, ruling or order. The Commission shall promulgate rules of procedures to govern
the proceedings, hearings and appeals of cases falling with its jurisdiction.

The aggrieved party may appeal the order, decision or ruling of the Commission sitting en
banc to the Supreme Court by petition for review in accordance with the pertinent provisions of
the Rules of Court.

Even under the foregoing express grant of power and authority, there can be no automatic corporate
dissolution simply because the incorporators failed to abide by the required filing of by-laws embodied
in Section 46 of the Corporation Code. There is no outright "demise" of corporate existence. Proper
notice and hearing are cardinal components of due process in any democratic institution, agency or
society. In other words, the incorporators must be given the chance to explain their neglect or
omission and remedy the same.

That the failure to file by-laws is not provided for by the Corporation Code but in another law is of no
moment. P.D. No. 902-A, which took effect immediately after its promulgation on March 11, 1976, is
very much apposite to the Code. Accordingly, the provisions abovequoted supply the law governing
the situation in the case at bar, inasmuch as the Corporation Code and P.D. No. 902-A are statutes
in pari materia. Interpretare et concordare legibus est optimus interpretandi. Every statute must be so
construed and harmonized with other statutes as to form a uniform system of jurisprudence. 18

As the "rules and regulations or private laws enacted by the corporation to regulate, govern and
control its own actions, affairs and concerns and its stockholders or members and directors and
officers with relation thereto and among themselves in their relation to it," 19 by-laws are indispensable
to corporations in this jurisdiction. These may not be essential to corporate birth but certainly, these
are required by law for an orderly governance and management of corporations. Nonetheless, failure
to file them within the period required by law by no means tolls the automatic dissolution of a
corporation.

In this regard, private respondents are correct in relying on the pronouncements of this Court
in Chung Ka Bio v. Intermediate Appellate Court, 20 as follows:

. . . . Moreover, failure to file the by-laws does not automatically operate to dissolve a
corporation but is now considered only a ground for such dissolution.

Section 19 of the Corporation Law, part of which is now Section 22 of the Corporation Code,
provided that the powers of the corporation would cease if it did not formally organize and
commence the transaction of its business or the continuation of its works within two years from
date of its incorporation. Section 20, which has been reproduced with some modifications in
Section 46 of the Corporation Code, expressly declared that "every corporation formed under
this Act, must within one month after the filing of the articles of incorporation with the Securities
and Exchange Commission, adopt a code of by-laws." Whether this provision should be given
mandatory or only directory effect remained a controversial question until it became academic
 with the adoption of PD 902-A. Under this decree, it is now clear that the failure to file by-laws
within the required period is only a ground for suspension or revocation of the certificate of
registration of corporations.

Non-filing of the by-laws will not result in automatic dissolution of the corporation. Under
Section 6(I) of PD 902-A, the SEC is empowered to "suspend or revoke, after proper notice
and hearing, the franchise or certificate of registration of a corporation" on the ground inter
alia of "failure to file by-laws within the required period." It is clear from this provision that there
must first of all be a hearing to determine the existence of the ground, and secondly, assuming
such finding, the penalty is not necessarily revocation but may be only suspension of the
charter. In fact, under the rules and regulations of the SEC, failure to file the by-laws on time
may be penalized merely with the imposition of an administrative fine without affecting the
corporate existence of the erring firm.

It should be stressed in this connection that substantial compliance with conditions subsequent
will suffice to perfect corporate personality. Organization and commencement of transaction of
corporate business are but conditions subsequent and not prerequisites for acquisition of
corporate personality. The adoption and filing of by-laws is also a condition subsequent. Under
Section 19 of the Corporation Code, a Corporation commences its corporate existence and
juridical personality and is deemed incorporated from the date the Securities and Exchange
Commission issues certificate of incorporation under its official seal. This may be done even
before the filing of the by-laws, which under Section 46 of the Corporation Code, must be
adopted "within one month after receipt of official notice of the issuance of its certificate of
incorporation." 21

That the corporation involved herein is under the supervision of the HIGC does not alter the result of
this case. The HIGC has taken over the specialized functions of the former Home Financing
Corporation by virtue of Executive Order No. 90 dated December 17, 1989. 22 With respect to
homeowners associations, the HIGC shall "exercise all the powers, authorities and responsibilities
that are vested on the Securities and Exchange Commission . . . , the provision of Act 1459, as
amended by P.D. 902-A, to the contrary notwithstanding." 23

WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned
Decision of the Court of Appeals AFFIRMED. This Decision is immediately executory. Costs against
petitioner.

SO ORDERED.
G.R. No. 172409             February 4, 2008

ROOS INDUSTRIAL CONSTRUCTION, INC. and OSCAR TOCMO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSE MARTILLOS, respondents.

DECISION

TINGA, J.:

In this Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure,
petitioners Roos Industrial Construction, Inc. and Oscar Tocmo assail the Court of Appeals’2 Decision
dated 12 January 2006 in C.A. G.R. SP No. 87572 and its Resolution3 dated 10 April 2006 denying
their Motion for Reconsideration.4

The following are the antecedents.

On 9 April 2002, private respondent Jose Martillos (respondent) filed a complaint against petitioners
for illegal dismissal and money claims such as the payment of separation pay in lieu of reinstatement
plus full backwages, service incentive leave, 13th month pay, litigation expenses, underpayment of
holiday pay and other equitable reliefs before the National Capital Arbitration Branch of the National
Labor Relations Commission (NLRC), docketed as NLRC NCR South Sector Case No. 30-04-01856-
02.

Respondent alleged that he had been hired as a driver-mechanic sometime in 1988 but was not
made to sign any employment contract by petitioners. As driver mechanic, respondent was assigned
to work at Carmona, Cavite and he worked daily from 7:00 a.m. to 10:00 p.m. at the rate of P200.00 a
day. He was also required to work during legal holidays but was only paid an additional 30% holiday
pay. He likewise claimed that he had not been paid service incentive leave and 13th month pay during
the entire course of his employment. On 16 March 2002, his employment was allegedly terminated
without due process.5

Petitioners denied respondent’s allegations. They contended that respondent had been hired on
several occasions as a project employee and that his employment was coterminous with the duration
of the projects. They also maintained that respondent was fully aware of this arrangement.
Considering that respondent’s employment had been validly terminated after the completion of the
projects, petitioners concluded that he is not entitled to separation pay and other monetary claims,
even attorney’s fees.6

The Labor Arbiter ruled that respondent had been illegally dismissed after finding that he had
acquired the status of a regular employee as he was hired as a driver with little interruption from one
project to another, a task which is necessary to the usual trade of his employer.7 The Labor Arbiter
pertinently stated as follows:

x x x If it were true that complainant was hired as project employee, then there should have
been project employment contracts specifying the project for which complainant’s services
were hired, as well as the duration of the project as required in Art. 280 of the Labor Code. As
there were four (4) projects where complainant was allegedly assigned, there should have
been the equal number of project employment contracts executed by the complainant. Further,
for every project termination, there should have been the equal number of termination report
submitted to the Department of Labor and Employment. However, the record shows that there
 is only one termination [report] submitted to DOLE pertaining to the last project assignment of
complainant in Carmona, Cavite.

In the absence of said project employment contracts and the corresponding Termination
Report to DOLE at every project termination, the inevitable conclusion is that the complainant
was a regular employee of the respondents.

In the case of Maraguinot, Jr. v. NLRC, 284 SCRA 539, 556 [1998], citing capital Industrial
Construction Group v. NLRC, 221 SCRA 469, 473-474 [1993], it was ruled therein that a
project employee may acquire the status of a regular employee when the following concurs: (1)
there is a continuous rehiring of project employees even after the cessation of a project; and
(2) the tasks performed by the alleged "project employee" are vital, necessary and
indispensable to the usual business or trade of the employer. Both factors are present in the
instant case. Thus, even granting that complainant was hired as a project employee, he
eventually became a regular employee as there was a continuous rehiring of this services.

xxx

In the instant case, apart from the fact that complainant was not made to sign any project
employment contract x x x he was successively transferred from one project after another, and
he was made to perform the same kind of work as driver.8

The Labor Arbiter ordered petitioners to pay respondent the aggregate sum of P224,647.17
representing backwages, separation pay, salary differential, holiday pay, service incentive leave pay
and 13th month pay.9

Petitioners received a copy of the Labor Arbiter’s decision on 17 December 2003. On 29 December
2003, the last day of the reglementary period for perfecting an appeal, petitioners filed a
Memorandum of Appeal10 before the NLRC and paid the appeal fee. However, instead of posting the
required cash or surety bond within the reglementary period, petitioners filed a Motion for Extension
of Time to Submit/Post Surety Bond.11 Petitioners stated that they could not post and submit the
required surety bond as the signatories to the bond were on leave during the holiday season, and
made a commitment to post and submit the surety bond on or before 6 January 2004. The NLRC did
not act on the motion. Thereafter, on 6 January 2004, petitioners filed a surety bond equivalent to the
award of the Labor Arbiter.12

In a Resolution13 dated July 29, 2004, the Second Division of the NLRC dismissed petitioners’ appeal
for lack of jurisdiction. The NLRC stressed that the bond is an indispensable requisite for the
perfection of an appeal by the employer and that the perfection of an appeal within the reglementary
period and in the manner prescribed by law is mandatory and jurisdictional. In addition, the NLRC
restated that its Rules of Procedure proscribes the filing of any motion for extension of the period
within which to perfect an appeal. The NLRC summed up that considering that petitioners’ appeal had
not been perfected, it had no jurisdiction to act on said appeal and the assailed decision, as a
consequence, has become final and executory.14 The NLRC likewise denied petitioners’ Motion for
Reconsideration15 for lack of merit in another Resolution.16 On 11 November 2004, the NLRC issued
an entry of judgment declaring its resolution final and executory as of 9 October 2004. On
respondent’s motion, the Labor Arbiter ordered that the writ of execution be issued to enforce the
award. On 26 January 2005, a writ of execution was issued.17

Petitioners elevated the dismissal of their appeal to the Court of Appeals by way of a special civil
action of certiorari. They argued that the filing of the appeal bond evinced their willingness to comply
and was in fact substantial compliance with the Rules. They likewise maintained that the NLRC
gravely abused its discretion in failing to consider the meritorious grounds for their motion for
extension of time to file the appeal bond. Lastly, petitioners contended that the NLRC gravely erred in
issuing an entry of judgment as the assailed resolution is still open for review.18 On 12 January 2006,
the Court of Appeals affirmed the challenged resolution of the NLRC. Hence, the instant petition.

Before this Court, petitioners reiterate their previous assertions. They insist on the application of Star
Angel Handicraft v. National Labor Relations Commission, et al.19where it was held that a motion for
reduction of bond may be filed in lieu of the bond during the period for appeal. They aver that Borja
Estate v. Ballad,20which underscored the importance of the filing of a cash or surety bond in the
perfection of appeals in labor cases, had not been promulgated yet in 2003 when they filed their
appeal. As such, the doctrine in Borja could not be given retroactive effect for to do so would
prejudice and impair petitioners’ right to appeal. Moreover, they point out that judicial decisions have
no retroactive effect.21

The Court denies the petition.

The Court reiterates the settled rule that an appeal from the decision of the Labor Arbiter involving a
monetary award is only deemed perfected upon the posting of a cash or surety bond within ten (10)
days from such decision.22 Article 223 of the Labor Code states:

ART. 223. Appeal.—Decisions, awards or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. …

In case of a judgment involving a monetary award, an appeal by the employer may be

perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary award
in the judgment appealed from.

xxx

Contrary to petitioners’ assertion, the appeal bond is not merely procedural but jurisdictional. Without
said bond, the NLRC does not acquire jurisdiction over the appeal.23 Indeed, non-compliance with
such legal requirements is fatal and has the effect of rendering the judgment final and executory.24 It
must be stressed that there is no inherent right to an appeal in a labor case, as it arises solely from
the grant of statute.25

Evidently, the NLRC did not acquire jurisdiction over petitioners’ appeal within the ten (10)-day
reglementary period to perfect the appeal as the appeal bond was filed eight (8) days after the last
day thereof. Thus, the Court cannot ascribe grave abuse of discretion to the NLRC or error to the
Court of Appeals in refusing to take cognizance of petitioners’ belated appeal.

While indeed the Court has relaxed the application of this requirement in cases where the failure to
comply with the requirement was justified or where there was substantial compliance with the
rules,26 the overpowering legislative intent of Article 223 remains to be for a strict application of the
appeal bond requirement as a requisite for the perfection of an appeal and as a burden imposed on
the employer.27 As the Court held in the case of Borja Estate v. Ballad:28

The intention of the lawmakers to make the bond an indispensable requisite for the perfection
of an appeal by the employer is underscored by the provision that an appeal may be perfected
"only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear that
the LAWMAKERS intended the posting of a cash or surety bond by the employer to be
 the exclusive means by which an employer’s appeal may be considered completed. The law
however does not require its outright payment, but only the posting of a bond to ensure that
the award will be eventually paid should the appeal fail. What petitioners have to pay is a
moderate and reasonable sum for the premium of such bond.29

Moreover, no exceptional circumstances obtain in the case at bar which would warrant a relaxation of
the bond requirement as a condition for perfecting the appeal. It is only in highly meritorious cases
that this Court opts not to strictly apply the rules and thus prevent a grave injustice from being
done30 and this is not one of those cases.

In addition, petitioners cannot take refuge behind the Court’s ruling in Star Angel. Pertinently, the
Court stated in Computer Innovations Center v. National Labor Relations Commission:31

Moreover, the reference in Star Angel to the distinction between the period to file the appeal
and to perfect the appeal has been pointedly made only once by this Court in Gensoli v.
NLRC thus, it has not acquired the sheen of venerability reserved for repeatedly-cited cases.
The distinction, if any, is not particularly evident or material in the Labor Code; hence, the
reluctance of the Court to adopt such doctrine. Moreover, the present provision in the NLRC
Rules of Procedure, that "the filing of a motion to reduce bond shall not stop the running of the
period to perfect appeal" flatly contradicts the notion expressed in Star Angel that there is a
distinction between filing an appeal and perfecting an appeal.

Ultimately, the disposition of Star Angel was premised on the ruling that a motion for reduction
of the appeal bond necessarily stays the period for perfecting the appeal, and that the
employer cannot be expected to perfect the appeal by posting the proper bond until such time
the said motion for reduction is resolved. The unduly stretched-out distinction between the
period to file an appeal and to perfect an appeal was not material to the resolution of Star
Angel, and thus could properly be considered as obiter dictum.32

Lastly, the Court does not agree that the Borja doctrine should only be applied prospectively. In the
first place, Borja is not a ground-breaking precedent as it is a reiteration, emphatic though, of long
standing jurisprudence.33 It is well to recall too our pronouncement in Senarillos v. Hermosisima, et
al.34 that the judicial interpretation of a statute constitutes part of the law as of the date it was
originally passed, since the Court’s construction merely establishes the contemporaneous legislative
intent that the interpreted law carried into effect. Such judicial doctrine does not amount to the
passage of a new law but consists merely of a construction or interpretation of a pre-existing one, as
is the situation in this case.35

At all events, the decision of the Labor Arbiter appears to be well-founded and petitioners’ ill-starred
appeal untenable.

WHEREFORE, the Petition is DENIED. Costs against petitioners.

SO ORDERED.
G.R. No. 98382 May 17, 1993

PHILIPPINE NATIONAL BANK, petitioner,

vs.
THE COURT OF APPEALS and EPIFANIO DE LA CRUZ, respondents.

Santiago, Jr., Vidad, Corpus & Associates for petitioner.

Pedro R. Lazo for spouses-intervenors.

Rosendo G. Tansinsin, Jr. for private respondent.

MELO, J.:

The notices of sale under Section 3 of Act No. 3135, as amended by Act No. 4118, on extra-judicial
foreclosure of real estate mortgage are required to be posted for not less than twenty days in at least
three public places of the municipality or city where the property is situated, and if such property is
worth more than four hundred pesos, such notices shall also be published once a week for at least
three consecutive weeks in a newspaper of general circulation in the municipality or city.

Respondent court, through Justice Filemon Mendoza with whom Justices Campos, Jr. and Aldecoa,
Jr. concurred, construed the publication of the notices on March 28, April 11 and l2, 1969 as a fatal
announcement and reversed the judgment appealed from by declaring void, inter alia, the auction
sale of the foreclosed pieces of realty, the final deed of sale, and the consolidation of ownership (p.
27, Rollo).

Hence, the petition at bar, premised on the following backdrop lifted from the text of the challenged
decision:

The facts of the case as related by the trial court are, as follows:

This is a verified complaint brought by the plaintiff for the reconveyance to

him (and resultant damages) of two (2) parcels of land mortgaged by him
to the defendant Philippine National Bank (Manila), which the defendant
allegedly unlawfully foreclosed. The defendant then consolidated
ownership unto itself, and subsequently sold the parcels to third parties.
The amended Answer of the defendant states on the other hand that the
extrajudicial foreclosure, consolidation of ownership, and subsequent sale
to the third parties were all valid, the bank therefore counterclaims for
damages and other equitable remedies.

x x x           x x x          x x x

From the evidence and exhibits presented by both parties, the Court is of
the opinion that the following facts have been proved: Two lots, located at
Bunlo, Bocaue, Bulacan (the first covered by Torrens Certificate No.
16743 and possessed of an area of approximately 3,109 square meters:
the second covered by Torrens Certificate No. 5787, possessed of an
area of around 610 square meters, and upon which stood a residential-
 commercial building were mortgaged to the defendant Philippine National
Bank. The lots were under the common names of the plaintiff (Epifanio
dela Cruz), his brother (Delfin) and his sister (Maria). The mortgage was
made possible because of the grant by the latter two to the former of a
special power of attorney to mortgage the lots to the defendant. The lots
were mortgaged to guarantee the following promissory notes:

(1) a promissory note for Pl2,000.00, dated September 2, 1958, and payable within 69
days (date of maturity — Nov. l0, 1958);

(2) a promissory note for P4,000.00, dated September 22, 1958, and payable within 49
days (date of maturity — Nov. 10, 1958);

(3) a promissory note for P4,000.00, dated June 30, 1.9581 and payable within 120 days
(date of maturity — Nov. 10, 1958) See also Annex C of the complaint itself).

[1 This date of June 30, 1958 is disputed by the plaintiff who claims that the correct date
is June 30, 1961, which is the date actually mentioned in the promissory note. It is
however difficult to believe the plaintiff's contention since if it were true and correct, this
would mean that nearly three (3) years elapsed between the second and the third
promissory note; that at the time the third note was executed, the first two had not yet
been paid by the plaintiff despite the fact that the first two were supposed to be payable
within 69 and 49 days respectively. This state of affairs would have necessitated the
renewal of said two promissory notes. No such renewal was proved, nor was the
renewal ever alleged. Finally, and this is very significant: the third mentioned promissory
note states that the maturity date is Nov. 10, 1958. Now then, how could the loan have
been contracted on June 30, 1961? It will be observed that in the bank records, the third
mentioned promissory note was really executed on June 30, 1958 (See Exhs. 9 and 9-
A). The Court is therefore inclined to believe that the date "June 30, 1961" was a mere
clerical error and hat the true and correct date is June 1958. However, even assuming
that the true and correct date is June 30, 1961, the fact still remains that the first two
promissory notes had been guaranteed by the mortgage of the two lots, and therefore, it
was legal and proper to foreclose on the lots for failure to pay said two promissory
notes.

On September 6, 1961, Atty. Ramon de los Reyes of the bank (PNB) presented under
Act No. 3135 a foreclosure petition of the two mortgaged lots before the Sheriff's Office
at Malolos, Bulacan; accordingly, the two lots were sold or auctioned off on October 20,
1961 with the defendant PNB as the highest bidder for P28,908.46. On March 7, 1963,
Sheriff Leopoldo Palad executed a Final Deed of Sale, in response to a letter-request by
the Manager of the PNB (Malolos Branch). On January 15, 1963 a Certificate of Sale in
favor of the defendant was executed by Sheriff Palad. The final Deed of Sale was
registered in the Bulacan Registry of Property on March 19, 1963. Inasmuch as the
plaintiff did not volunteer to buy back from the PNB the two lots, the PNB sold on June
4, 1970 the same to spouses Conrado de Vera and Marina de Vera in a "Deed of
Conditional Sale". (Decision, pp.3-5; Amended Record on Appeal, pp. 96-98).

After due consideration of the evidence, the CFI on January 22, 1978 rendered its
Decision, the dispositive portion of which reads:

WHEREFORE, PREMISES CONSIDERED, the instant complaint against

the defendant Philippine National Bank is hereby ordered DISMISSED,
 with costs against the plaintiff. The Counterclaim against the plaintiff is
likewise DISMISSED, for the Court does not believe that the complaint
had been made in bad faith.

SO ORDERED. (Decision, p. B.; Amended Record on Appeal, p. 100)

Not satisfied with the judgment, plaintiff interposed the present appeal assigning as
errors the following:

I.

THE LOWER COURT ERRED IN HOLDING IN FOOTNOTE I OF ITS DECISION THAT

IT IS THEREFORE INCLINED TO BELIEVE THAT THE DATE "JUNE 30, 1962" WAS A
MERE CLERICAL ERROR AND THAT THE TRUE AND CORRECT DATE IS JUNE 30,
1958. IT ALSO ERRED IN HOLDING IN THE SAME FOOTNOTE I THAT "HOWEVER,
EVEN ASSUMING THAT THE TRUE AND CORRECT DATE IS JUNE 30, 1961, THE
FACT STILL REMAINS THAT THE FIRST TWO PROMISSORY NOTES HAD BEEN
GUARANTEED BY THE MORTGAGE OF THE TWO LOTS, AND THEREFORE, IT
WAS LEGAL AND PROPER TO FORECLOSE ON THE LOTS FOR FAILURE TO PAY
SAID TWO PROMISSORY NOTES". (page 115, Amended Record on Appeal)

II.

THE LOWER COURT ERRED IN NOT HOLDING THAT THE PETITION FOR
EXTRAJUDICIAL FORECLOSURE WAS PREMATURELY FILED AND IS A MERE
SCRAP OF PAPER BECAUSE IT MERELY FORECLOSED THE ORIGINAL AND NOT
THE AMENDED MORTGAGE.

III.

THE LOWER COURT ERRED IN HOLDING THAT "IT IS CLEAR THAT THE AUCTION
SALE WAS NOT PREMATURE". (page 117, Amended Record on Appeal)

IV.

THE LOWER COURT ERRED IN HOLDING THAT "SUFFICE IT TO STATE THAT

ACTUALLY THE POWER OF ATTORNEY GIVEN TO THE PNB WAS EMBODIED IN
THE REAL ESTATE MORTGAGE (EXB. 10) WHICH WAS REGISTERED IN THE
REGISTRY OF PROPERTY OF BULACAN AND WAS ANNOTATED ON THE TWO
TORRENS CERTIFICATES INVOLVED" (page 118, Amended Record on Appeal).

V.

THE LOWER COURT ERRED IN HOLDING THAT "THE NOTICES REQUIRED

UNDER SEC. 3 OF ACT NO. 3135 WERE ALL COMPLIED WITH" AND "THAT THE
DAILY RECORD . . . IS A NEWSPAPER OF GENERAL CIRCULATION (pages 117-
118, Amended Record on Appeal).

VI.
 THE LOWER COURT ERRED IN NOT DECLARING THE CERTIFICATE OF SALE,
FINAL DEED OF SALE AND AFFIDAVIT OF CONSOLIDATION, NULL AND VOID.

VII.

THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO RECONVEY TO

PLAINTIFF THE PARCELS OF LAND COVERED BY T.C.T. NOS. 40712 AND 40713
OF BULACAN (page 8, Amended Record on Appeal)

VIII.

THE LOWER COURT ERRED IN NOT ORDERING DEFENDANT TO PAY TO

PLAINTIFF REASONABLE AMOUNTS OF MORAL AND EXEMPLARY DAMAGES
AND ATTORNEY'S FEES (page 8. Amended Record on Appeal).

IX.

THE LOWER COURT ERRED IN DISMISSING THE INSTANT COMPLAINT AGAINST

THE PHILIPPINE NATIONAL BANK WITH COSTS AGAINST THE PLAINTIFF. (page
118, Amended Record on Appeal)." (Brief for Plaintiff-Appellant, pp. 1-4) (pp. 17-
21, Rollo)

With reference to the pertinent issue at hand, respondent court opined:

The Notices of Sale of appellant's foreclosed properties were published on March 228,
April 11 and April 12, 1969 issues of the newspaper "Daily Record" (Amended Record
on Appeal, p. 108). The date March 28, 1969 falls on a Friday while the dates April 11
and 12, 1969 are on a Friday and Saturday, respectively. Section 3 of Act No. 3135
requires that the notice of auction sale shall be "published once a week for at least three
consecutive weeks". Evidently, defendant-appellee bank failed to comly with this legal
requirement. The Supreme Court has held that:

The rule is that statutory provisions governing publication of notice of

mortgage foreclosure sales must be strictly complied with, and that even
slight deviations therefrom will invalidate the notice and render the sale at
least voidable (Jalandoni vs. Ledesma, 64 Phil. l058. G.R. No. 42589,
August 1937 and October 29, 1937). Interpreting Sec. 457 of the Code of
Civil Procedure (reproduced in Sec. 18(c) of Rule 39, Rules of Court and
in Sec. 3 of Act No. 3135) in Campomanes vs. Bartolome and German &
Co. (38 Phil. 808, G.R. No. 1309, October 18, 1918), this Court held that if
a sheriff sells without notice prescribed by the Code of Civil Procedure
induced thereto by the judgment creditor, and the purchaser at the sale is
the judgment creditor, the sale is absolutely void and no title passes. This
is regarded as the settled doctrine in this jurisdiction whatever the rule
may be elsewhere (Boria vs. Addison, 14 Phil. 895, G.R. No. 18010, June
21, 1922).

. . . It has been held that failure to advertise a mortgage foreclosure sale in

compliance with statutory requirements constitutes a jurisdictional defect
invalidating the sale and that a substantial error or omission in a notice of
sale will render the notice insufticient and vitiate the sale (59 C.J.S. 1314).
 (Tambunting vs. Court of Appeals, L-48278, November 8, 1988; 167
SCRA 16, 23-24).

In view of the admission of defendant-appellee in its pleading showing that there was no
compliance of the notice prescribed in Section 3 of Act No. 3135, as amended by Act
4118, with respect to the notice of sale of the foreclosed real properties in this case, we
have no choice but to declare the auction sale as absolutely void in view of the fact that
the highest bidder and purchaser in said auction sale was defendant-appellee bank.
Consequently, the Certificate of Sale, the Final Deed of Sale and Affidavit of
Consolidation are likewise of no legal efffect. (pp. 24-25, Rollo)

Before we focus our attention on the subject of whether or not there was valid compliance in regard to
the required publication, we shall briefly discuss the other observations of respondent court vis-a-
vis herein private respondent's ascriptions raised with the appellate court when his suit for
reconveyance was dismissed by the court of origin even as private respondent does not impugn the
remarks of respondent court along this line.

Although respondent court acknowledged that there was an ambiguity on the date of execution of the
third promissory note (June 30, 1961) and the date of maturity thereof (October 28, 1958), it was
nonetheless established that the bank introduced sufficient proof to show that the discrepancy was a
mere clerical error pursuant to Section 7, Rule l30 of the Rules of Court. Anent the second disputation
aired by private respondent, the appellate court observed that inasmuch as the original as well as the
subsequent mortgage were foreclosed only after private respondent's default, the procedure pursued
by herein petitioner in foreclosing the collaterals was thus appropriate albeit the petition therefor
contained only a copy of the original mortgage.

It was only on the aspect of publication of the notices of sale under Act No. 3135, as amended, and
attorney's fees where herein private respondent scored points which eliminated in the reversal of the
trial court's decision. Respondent court was of the impression that herein petitioner failed to comply
with the legal requirement and the sale effected thereafter must be adjudged invalid following the
ruling of this Court in Tambunting vs. Court of Appeals (167 SCRA 16 [1988]); p. 8, Decision, p.
24, Rollo). In view of petitioner's so-called indifference to the rules set forth under Act No. 3135, as
amended, respondent court expressly authorized private respondent to recover attorney's fees
because he was compelled to incur expenses to protect his interest.

Immediately upon the submission of a supplemental petition, the spouses Conrado and Marina De
Vera filed a petition in intervention claiming that the two parcels of land involved herein were sold to
them on June 4, 1970 by petitioner for which transfer certificates of title were issued in their favor (p.
40, Rollo). On the other hand, private respondent pressed the idea that the alleged intervenors have
no more interest in the disputed lots in view of the sale effected by them to Teresa Castillo, Aquilino
and Antonio dela Cruz in 1990 (pp. 105-106, Rollo).

On March 9, 1992, the Court resolved to give due course to the petition and required the parties to
submit their respective memoranda (p. 110, Rollo).

Now, in support of the theory on adherence to the conditions spelled in the preliminary portion of this
discourse, the pronouncement of this Court in Bonnevie vs. Court of Appeals (125 SCRA [1983]; p.
135, Rollo) is sought to be utilized to press the point that the notice need not be published for three
full weeks. According to petitioner, there is no breach of the proviso since after the first publication on
March 28, 1969, the second notice was published on April 11, 1969 (the last day of the second
week), while the third publication on April 12, 1969 was announced on the first day of the third week.
Petitioner thus concludes that there was no violation from the mere happenstance that the third
publication was made only a day after the second publication since it is enough that the second
publication be made on any day within the second week and the third publication, on any day within
the third week. Moreover, in its bid to rectify its admission in judicio, petitioner asseverates that said
admission alluded to refers only to the dates of publications, not that there was non-compliance with
the publication requirement.

Private respondent, on the other hand, views the legal question from a different perspective. He
believes that the period between each publication must never be less than seven consecutive days
(p. 4, Memorandum; p. 124, Rollo).

We are not convinced by petitioner's submissions because the disquisition in support thereof rests on
the erroneous impression that the day on which the first publication was made, or on March 28, 1969,
should be excluded pursuant to the third paragraph of Article 17 of the New Civil Code.

It must be conceded that Article 17 is completely silent as to the definition of what is a "week".
In Concepcion vs. Zandueta (36 O.G. 3139 [1938]; Moreno, Philippine Law Dictionary, Second Ed.,
1972, p. 660), this term was interpreted to mean as a period of time consisting of seven consecutive
days — a definition which dovetails with the ruling in E.M. Derby and Co. vs. City of Modesto, et al.
(38 Pac. Rep. 900 [1984]; 1 Paras, Civil Code of the Philippines Annotated, Twelfth Ed., 1989, p. 88;
1 Tolentino, Commentaries and Jurisprudence on th Civil Code, 1990, p. 46). Following the
interpretation in Derby as to the publication of an ordinance for "at least two weeks" in some
newspaper that:

. . . here there is no date or event suggesting the exclusion of the first day's publication
from the computation, and the cases above cited take this case out of the rule stated in
Section 12, Code Civ. Proc. which excludes the first day and includes the last;

the publication effected on April 11, 1969 cannot be construed as sufficient advertisement for
the second week because the period for the first week should be reckoned from March 28,
1969 until April 3, 1969 while the second week should be counted from April 4, 1969 until April
10, 1969. It is clear that the announcement on April 11, 1969 was both theoretically and
physically accomplished during the first day of the third week and cannot thus be equated with
compliance in law. Indeed, where the word is used simply as a measure of duration of time
and without reference to the calendar, it means a period of seven consecutive days without
regard to the day of the week on which it begins (1 Tolentino, supra at p. 467 citing Derby).

Certainly, it would have been absurd to exclude March 28, 1969 as reckoning point in line with the
third paragraph of Article 13 of the New Civil Code, for the purpose of counting the first week of
publication as to the last day thereof fall on April 4, 1969 because this will have the effect of extending
the first week by another day. This incongruous repercussion could not have been the unwritten
intention of the lawmakers when Act No. 3135 was enacted. Verily, inclusion of the first day of
publication is in keeping with the computation in Bonnevie vs. Court of Appeals (125 SCRA 122
[1983]) where this Court had occasion to pronounce, through Justice Guerrero, that the publication of
notice on June 30, July 7 and July 14, 1968 satisfied the publication requirement under Act No. 3135.
Respondent court cannot, therefore, be faulted for holding that there was no compliance with the
strict requirements of publication independently of the so- called admission in judicio.

WHEREFORE, the petitions for certiorari and intervention are hereby dismissed and the decision of
the Court of Appeals dated April 17, 1991 is hereby affirmed in toto.

SO ORDERED.
G.R. No. 109902 August 2, 1994

ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR. ALAN
G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R.
SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ,
BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN,
and GERRY I. FETALVERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION
(NSC), respondents.

Leonard U. Sawal for petitioners.

Saturnino Mejorada for private respondent.

FELICIANO, J.:

In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations
Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project employees of
private respondent National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15
February 1993, denying petitioners' motion for reconsideration.

Petitioners plead that they had been employed by respondent NSC in connection with its Five Year
Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were separated from
NSC's service:

Employee Date Nature of Separated

Employed Employment

1. Alan Barinque 5-14-82 Engineer 1 8-31-91

2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present
4. Osias Dandasan 9-21-82 Utilityman 1991
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
9. Russell Gacus 1-30-85 Engineer 1 6-30-92
10. Jose Garguena 3-02-81 Warehouseman to present
11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
13. Romeo Sarona 2-26-83 Machine Operator 8-31-912

On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and
monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7 June
1991, declared petitioners "regular project employees who shall continue their employment as such
for as long as such [project] activity exists," but entitled to the salary of a regular employee pursuant
to the provisions in the collective bargaining agreement. It also ordered payment of salary
differentials. 3

Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not
project, employees. Private respondent, on the other hand, claimed that petitioners are project
employees as they were employed to undertake a specific project — NSC's Five Year Expansion
Program (FAYEP I & II).

The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the Labor
Arbiter's holding that petitioners were project employees since they were hired to perform work in a
specific undertaking — the Five Years Expansion Program, the completion of which had been
determined at the time of their engagement and which operation was not directly related to the
business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same
benefits enjoyed by regular employees for lack of legal and factual basis.

Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to
show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of the
NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February 1993.

The law on the matter is Article 280 of the Labor Code which reads in full:

Art. 280. Regular and Casual Employment — The provisions of the written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, and
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists. (Emphasis supplied)

Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary,
desirable and work-related to private respondent's main business, steel-making"; and (ii) they have
rendered service for six (6) or more years to private respondent NSC. 4

The basic issue is thus whether or not petitioners are properly characterized as "project employees"
rather than "regular employees" of NSC. This issue relates, of course, to an important consequence:
the services of project employees are co-terminous with the project and may be terminated upon the
end or completion of the project for which they were hired. 5 Regular employees, in contract, are
legally entitled to remain in the service of their employer until that service is terminated by one or
another of the recognized modes of termination of service under the Labor Code. 6

It is evidently important to become clear about the meaning and scope of the term "project" in the
present context. The "project" for the carrying out of which "project employees" are hired would
ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project"
undertaking might not have an ordinary or normal relationship to the usual business of the employer.
In this latter case, the determination of the scope and parameeters of the "project" becomes fairly
easy. It is unusual (but still conceivable) for a company to undertake a project which has absolutely
no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-
making company which would undertake the breeding and production of fish or the cultivation of
vegetables. From the viewpoint, however, of the legal characterization problem here presented to the
Court, there should be no difficulty in designating the employees who are retained or hired for the
purpose of undertaking fish culture or the production of vegetables as "project employees," as
distinguished from ordinary or "regular employees," so long as the duration and scope of the project
were determined or specified at the time of engagement of the "project employees." 7 For, as is
evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for
determining whether particular employees are properly characterized as "project employees" as
distinguished from "regular employees," is whether or not the "project employees" were assigned to
carry out a "specific project or undertaking," the duration (and scope) of which were specified at the
time the employees were engaged for that project.

In the realm of business and industry, we note that "project" could refer to one or the other of at least
two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or
undertaking that is within the regular or usual business of the employer company, but which is distinct
and separate, and identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. The typical example of this first
type of project is a particular construction job or project of a construction company. A construction
company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-
five- storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects,
the scope and duration of which has been determined and made known to the employees at the time
of employment, are properly treated as "project employees," and their services may be lawfully
terminated at completion of the project.

The term "project" could also refer to, secondly, a particular job or undertaking that is not within the
regular business of the corporation. Such a job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times. The case at bar presents what appears to our
mind as a typical example of this kind of "project."

NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of
expanding the volume and increasing the kinds of products that it may offer for sale to the public. The
Five Year Expansion Program had a number of component projects: e.g., (a) the setting up of a "Cold
Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the
acquisition and installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals
Project." 8 Instead of contracting out to an outside or independent contractor the tasks
of constructing the buildings with related civil and electrical works that would house the new
machinery and equipment, the installation of the newly acquired mill or plant machinery and
equipment and the commissioning of such machinery and equipment, NSC opted to execute and
carry out its Five Yeear Expansion Projects "in house," as it were, by administration. The carrying out
of the Five Year Expansion Program (or more precisely, each of its component projects) constitutes a
distinct undertaking identifiable from the ordinary business and activity of NSC. Each component
project, of course, begins and ends at specified times, which had already been determined by the
time petitioners were engaged. We also note that NSC did the work here involved — the construction
of buildings and civil and electrical works, installation of machinery and equipment and the
commissioning of such machinery — only for itself. Private respondent NSC was not in the business
of constructing buildings and installing plant machinery for the general business community, i.e., for
unrelated, third party, corporations. NSC did not hold itself out to the public as a construction
company or as an engineering corporation.
Which ever type of project employment is found in a particular case, a common basic requisite is that
the designation of named employees as "project employees" and their assignment to a specific
project, are effected and implemented in good faith, and not merely as a means of evading otherwise
applicable requirements of labor laws.

Thus, the particular component projects embraced in the Five Year Expansion Program, to which
petitioners were assigned, were distinguishable from the regular or ordinary business of NSC which,
of course, is the production or making and marketing of steel products. During the time petitioners
rendered services to NSC, their work was limited to one or another of the specific component projects
which made up the FAYEP I and II. There is nothing in the record to show that petitioners were hired
for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously
installed and commissioned, steel-making machinery and equipment, or for selling the finished steel
products.

We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners
were indeed "project employees:"

It is well established by the facts and evidence on record that herein 13 complainants
were hired and engaged for specific activities or undertaking the period of which has
been determined at time of hiring or engagement. It is of public knowledge and which
this Commission can safely take judicial notice that the expansion program (FAYEP) of
respondent NSC consist of various phases [of] project components which are being
executed or implemented independently or simultaneously from each other . . .

In other words, the employment of each "project worker" is dependent and co-terminous
with the completion or termination of the specific activity or undertaking [for which] he
was hired which has been pre-determined at the time of engagement. Since, there is no
showing that they (13 complainants) were engaged to perform work-related activities to
the business of respondent which is steel-making, there is no logical and legal sense of
applying to them the proviso under the second paragraph of Article 280 of the Labor
Code, as amended.

xxx xxx xxx

The present case therefore strictly falls under the definition of "project employees" on
paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been
held that the length of service of a project employee is not the controlling test of
employment tenure but whether or not "the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee". (See Hilario Rada v. NLRC, G.R. No.
96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674 (1985). 9

Petitioners next claim that their service to NSC of more than six (6) years should qualify them as
regular employees. We believe this claim is without legal basis. The simple fact that the employment
of petitioners as project employees had gone beyond one (1) year, does not detract from, or legally
dissolve, their status as project employees. 10 The second paragraph of Article 280 of the Labor
Code, quoted above, providing that an employee who has served for at least one (1) year, shall be
considered a regular employee, relates to casual employees, not to project employees.

In the case of Mercado, Sr. vs. National Labor Relations Commission,  11 this Court ruled that the
proviso in the second paragraph of Article 280 relates only to casual employees and is not applicable
to those who fall within the definition of said Article's first paragraph, i.e., project employees. The
familiar grammatical rule is that a proviso is to be construed with reference to the immediately
preceding part of the provision to which it is attached, and not to other sections thereof, unless the
clear legislative intent is to restrict or qualify not only the phrase immediately preceding the proviso
but also earlier provisions of the statute or even the statute itself as a whole. No such intent is
observable in Article 280 of the Labor Code, which has been quoted earlier.

ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of
merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are hereby
AFFIRMED. No pronouncement as to costs.

SO ORDERED.